Bitcoin and major cryptos continue downward spiral

·3-min read
Representation of cryptocurrencies are seen in this illustration photo taken in Krakow, Poland on June 29, 2021 (Photo Illustration by Jakub Porzycki/NurPhoto via Getty Images)
Cryptocurrencies have been under much pressure for regulation from global governments to central banks, with several countries imposing measures to regulate digital tokens. Photo: Jakub Porzycki/NurPhoto via Getty Images

The most valuable cryptocurrencies by market cap have continued a downward slide on Tuesday.

Bitcoin (BTC-USD) fell 3.6% to $33,164 (£23,906) falling as much as $32,804 on Tuesday morning. The largest token has been unable to either break upwards or correct downwards, being stuck to break above the $36,000 mark, but stayed managed to float $32,000.

The decline comes after bitcoin reached a high of $41,330 on 15 June, passing past a key $41,250 resistance area, however, it has been decreasing and on a volatile path since.

Other cryptos followed suit, ethereum (ETH-USD) declined 6.5% to $2,015, while Tesla (TSLA) boss Elon Musk's favourite joke token, Dogecoin (DOGE-USD) fell 6.3% to $0.20 during the session.

Chart: Yahoo Finance
Chart: Yahoo Finance

It comes after the Metropolitan police's economic crime command seized almost £180m ($250m) of bitcoin on Tuesday following an investigation into international money laundering. The Met also confiscated £114m of the cryptocurrency last month.

"While cash still remains king in the criminal word, as digital platforms develop we’re increasingly seeing organised criminals using cryptocurrency to launder their dirty money," the Met's deputy assistant commissioner, Graham McNulty said. "Whilst some years ago this was fairly unchartered territory, we now have highly trained officers and specialist units working hard in this space to remain one step ahead of those using it for illicit gain."

Cryptocurrencies have been under much pressure for regulation from global governments to central banks, with several countries imposing measures to regulate digital tokens.

Watch: What is bitcoin?

China has been the strictest in its moves. Chinese vice-premier Liu Hu promised in May that the nation would "severely crack down on illegal securities activities and severely punish illegal financial activities." The country extended the clampdown on the bitcoin mining industry to its biggest bitcoin producing provinces, including the southwest province of Sichuan, in June.

The Bank of England (BoE) governor, Andrew Bailey, previously said digital currencies will not get a regulatory "free pass" in the future, despite their potential for innovation.

Meanwhile, the UK's Financial Conduct Authority previously warned that if consumers invest in cryptoassets "they should be prepared to lose all their money".

The regulator estimated that 2.3 million adults in Britain now hold crypto assets, up from 1.9 million last year, with increasing numbers of people seeing them as either a complement or alternative to mainstream investments.

UK bank TSB banned over 5 million customers from purchasing cryptos amid fears over "excessively high" fraud rates on trading platforms. TSB's move follows similar moves by other UK banks amid a crackdown on financial cyber crime. Earlier in May, Barclays (BARC.L) Monzo and Starling Bank temporarily banned cash transfers to crypto platforms such as Binance.

The UK's Advertising Standards Office announced it will start a major effort this month to remove misleading or irresponsible crypto ads, especially online.

Read more: From Binance to Coinbase: The rise of cryptocurrency exchanges

Cryptos have been boosted by institutional support recently. Several organisations, including MicroStrategy (MSTR) and Tesla, have invested billions of dollars into cryptocurrencies and traditional financial firms like PayPal (PYPL) and Goldman Sachs (GS) started to handle the asset on behalf of clients.

Despite regulation fears, there has been more adoption of cryptocurrencies, especially bitcoin. A member of Argentina’s congress submitted a bill that would allow staff to receive their salary in bitcoin, to "strengthen their autonomy and conserve the purchasing power of their remuneration.”

Last month, El Salvador's president Nayib Bukele announced it would accept bitcoin as legal tender. The move makes the Central American nation the first in the world to formally adopt the digital currency.

Watch: What are the risks of investing in cryptocurrency?