Bitcoin Boomerangs on a Chaotic Day for Crypto

Image Credit: iStock Images, bodnarchuk

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Bitcoin investors were in for a chaotic Wednesday. The digital currency kicked off the day in freefall, diving 31% before whipping back two-thirds of those losses in a financial bungee jump.

While many newcomers to the digital coin game panicked—a sell-off temporarily brought down Binance and Coinbase’s platforms—veterans of the trade could only smile and say, “Welcome to the party.”

Get Used to It

Bitcoin began its nosedive last week when mercurial Tesla CEO Elon Musk said his company was nixing plans to accept Bitcoin as payment. But the plunge hit terminal velocity after Chinese regulators piled on Wednesday morning, cautioning financial institutions against accepting cryptocurrencies.

The entire digital coin ecosystem felt the tremors:

  • U.S. stocks tied to crypto trading tumbled: Coinbase fell as much as 12% and crypto miner Marathon Digital dipped 13%.
  • Ether, the second-biggest cryptocurrency, slumped as much as 40% and the one-day-joke, next-day-legitimate Dogecoin bamboozled investors once again, fell as much as 45%.

“This is going to be the first ‘welcome to crypto’ day for a lot of new entrants,” said Stephane Ouellette, CEO of FRNT Financial. “The history of these assets has been littered with aggressive rallies and sickening selloffs.”

While Bitcoin is heading for its first red month since November 2018, it spent much of the year charting towards a record peak. That volatility isn’t particularly unusual, either: during a bullish 2017, the foundational crypto saw six major corrections of 30%-40%. And before Wednesday, Bitcoin had already recorded dips of 31% and 35% in 2021.

Elon’s Chill Pill: Musk, for one, affirmed that Tesla is holding onto its recent $1.5 billion Bitcoin purchase for the long haul. And one of Bitcoin’s most unique champions, NFL free agent Russell Okung, said he’s strapped in for the ride, too. Okung chose to receive half of his $13 million salary from the Carolina Panthers in Bitcoin last year. “They laugh now but will cry later,” he confidently tweeted Wednesday.