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EXPLAINER: Why has the price of Bitcoin been falling?

Associated Press



Even by Bitcoin’s standards, Wednesday was pretty wild.

The price of the famously volatile digital currency fell nearly 30% at one point after the China Banking Association warned member banks of the risks associated with digital currencies. The decline narrowed to below 10% in the afternoon, but Bitcoin had still lost about $70 billion in market value in 24 hours.

Bitcoin has lost about 38% of its value since April 13 when it hit a high of more than $64,800, according to Coindesk. The China warning was just the latest headwind: Before Wednesday, Tesla’s decision to not accept the digital currency as payment for cars — after it said it would — and murmurings in Washington about tighter regulation of digital currencies had put pressure on Bitcoin. The price is still up about 31% in 2021 and nearly 300% from a year ago.

Here’s a look at Bitcoin and digital currencies in general:


Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who “mine” them by lending computing power to verify other users’ transactions. They receive Bitcoins in exchange. The coins also can be bought and sold on exchanges with U.S. dollars and other currencies. Some businesses take Bitcoin as payment, and a number of financial institutions allow it in their clients’ portfolios, but overall mainstream acceptance is still limited.

Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next. Transactions can be made anonymously, making the currency popular with libertarians as well as tech enthusiasts, speculators — and criminals.

Bitcoins have to be stored in a digital wallet, either online through an exchange like Coinbase, or offline on a hard drive using specialized software. According to Coinbase, there are about 18.7 million Bitcoins in circulation and only 21 million will ever exist. The reason for that is unclear, and where all the Bitcoins are is anyone’s guess.


On Wednesday, a statement posted on the Chinese Banking Association’s website said financial institutions should “resolutely refrain” from providing services using digital currencies because of their volatility.

Virtually every cryptocurrency fell after the industry group’s statement.

As of 4:15 p.m. eastern time Wednesday, Bitcoin was down more than 7% at around $40,310 per coin. Most cryptocurrencies lost between 7% and 22% of their value and shares of Coinbase dropped 5.4%.

It’s not unusual for the value of Bitcoin to change by thousands of dollars in a short time period, though swings totaling around $20,000 in one day are extreme. On the last trading day of 2020, Bitcoin closed just under $30,000. In mid-April, it flirted with $65,000.


Yes, and a fairly big one. Musk announced in February that his electric car company Tesla had invested $1.5 billion in Bitcoin. In March, Tesla began accepting Bitcoin as payment. Those actions contributed to the run-up in Bitcoin’s price, and Musk also promoted the digital currency Dogecoin, which also spiked in value.

However, Musk reversed course in just a short time, saying last week that Tesla would stop accepting Bitcoin because of the potential environmental damage that can result from Bitcoin mining. The announcement sent Bitcoin falling below $50,000 and set the tone for the big pullback recently in most cryptocurrencies.

A number of Bitcoin fans pushed back on Musk’s reasoning. Fellow billionaire Mark Cuban said that gold mining is much more damaging to the environment than the mining of Bitcoin.

A 2019 study by the Technical University of Munich and the Massachusetts Institute of Technology found that the Bitcoin network generates an amount of CO2 similar to a large Western city or an entire developing country like Sri Lanka. But a University of Cambridge study last year estimated that on average, 39% of “proof-of-work” crypto mining was powered by renewable energy, primarily hydroelectric energy.

There had been some concern among Bitcoin investors that Tesla would sell some or all of its Bitcoin holdings, but Musk indicated in a tweet Wednesday that Tesla was sticking with its investment.


The digital payment company Square and its CEO Jack Dorsey — also the CEO of Twitter — have been big proponents of Bitcoin. Overstock.com also accepts Bitcoin, and in February, BNY Mellon, the oldest bank in the U.S., said it would include digital currencies in the services it provides to clients. And Mastercard said it would start supporting “select crypto currencies” on its network.

Bitcoin has become popular enough that more than 300,000 transactions typically occur in an average day, according to Bitcoin wallet site blockchain.info. Still, its popularity is low compared with cash and credit cards.


Yes, plenty of it. Tracking Bitcoin’s price is obviously easier than trying to figure out its value, which is why so many institutions, experts and traders are skeptical about it and cryptocurrency in general. Digital currencies were seen as replacements for paper money, but that hasn’t happened so far. Federal Reserve Chair Jerome Powell has said the central bank prefers to call crypto coins “crypto assets,” because their volatility undermines their ability to store value, a basic function of a currency.

While some banks and financial services companies are getting in on it, others are staying away.


Regulators aren’t very worried about a possible crash in digital currencies dragging down the rest of the financial system or economy.

Even with the recent sell-off, digital currencies have a market value of about $1.72 trillion, according to the website coinmarketcap.com. But that pales compared with the $46.9 trillion stock market, $41.3 trillion residential real estate market and nearly $21 trillion Treasury market at the start of the year.

The European Central Bank said Wednesday that the risk of cryptocurrencies affecting the financial system’s stability looks “limited at present.” In large part, that’s because they’re still not widely used for payments and institutions under its purview still have little exposure to crypto-linked instruments.

Earlier this month, the Federal Reserve said a survey of market contacts found roughly one in five cited cryptocurrencies as a potential shock to the system over the next 12 to 18 months. That’s a turnaround from the fall, when a similar survey found none mentioning cryptocurrencies.


Washington officials have been talking about regulating digital currencies more, and worries about a heavier hand have played a role in the recent swoon in prices.

Gary Gensler, who took over as chairman of the Securities and Exchange Commission last month, has said that cryptocurrency markets would benefit from more oversight to protect investors.

In a hearing before the House’s financial services committee earlier this month, Gensler said neither the SEC nor the Commodity Futures Trading Commission, which he used to head, has a “regulatory framework” for trading on cryptocurrency exchanges yet. He said he thought Congress would ultimately have to address it because “there’s really not protection against fraud or manipulation.”


It’s a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto. Bitcoin was then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention. But proponents say that doesn’t matter: The currency obeys its own internal logic.

NEW YORK (AP) — The Associated Press undefined.

Reporters Matt Ott, Ken Sweet and Stan Choe in New York contributed.


Bitcoin jumps on speculation that Amazon considering crypto

Associated Press



Bitcoin jumps on speculation that Amazon considering crypto

Bitcoin’s price surged again Monday after speculation that Amazon may be entering the cryptocurrency sector after it posted a job seeking a “digital currency and blockchain product lead.”

Bitcoin jumped more than 14% in the past 24 hours, nearly reaching $40,000 per unit before settling closer to $37,000. The five-week intra-day high reached Monday comes after a long slide where it dipped under $30,000 from an April high of nearly $65,000.

There is also speculation that the price surge may have also been a result of traders buying up bitcoin to fill positions they were short on, having bet its value would fall further. But it’s difficult if not impossible to track short positions on the cryptocurrency.

Amazon’s job listing says the company is looking for “an experienced product leader to develop Amazon’s Digital Currency and Blockchain strategy and product roadmap.”

The Seattle-based online retail giant currently has 74 listings for jobs whose descriptions include the words “blockchain,” the backbone of cryptocurrencies, many dating back to earlier this year. However, the jobs are not necessarily related to blockchain development, but list blockchain background as relevant experience for those applying for the job.

In a statement, Amazon rejected as “fabricated” a report that said it would be accepting payments in cryptocurrency by the end of the year, and that it could launch its own digital coin in 2022.

But it did acknowledged that is exploring what the use of cryptocurrencies would look like on Amazon.

“We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible,” the company said.

Tom Forte, a senior research analyst who covers Amazon for the investment bank D.A. Davidson, said he doubts Amazon will accept bitcoin across its platform any time soon. Forte noted bitcoin accounts for less than 1% of transaction payments on Overstock.com, one of the few online retailers to accept the cryptocurrency.

“It’s been an effective mechanism for trading and speculation, but it hasn’t shown to date to be a form of currency for payments,” Forte said.

Proponents of bitcoin seem to have shifted their pitch from its value as a digital currency, focusing more on applying it as “store of value,” like gold or other commodities.

Bitcoin is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who “mine” them by lending computing power to verify other users’ transactions. They receive bitcoins in exchange.


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Amazon seeks to look into Blockchain amongst latest hype

Daryn Kara Ali



Amazon displays a lenient approach towards digital currencies as a new job listing was posted on Friday on the e-commerce site seeking a digital currency and blockchain specialist to lead its payments team.

As one of the biggest e-commerce companies in the world, Amazon is responsible for securing some of the widest transactions through various payment methods.

The tech giant’s Payments Acceptance and Experience team is reaching out to find a qualified product leader to create Amazon’s Digital Currency and Blockchain strategy.

As a product leader, it is required to work diligently with the company’s team to create a roadmap which includes customers experience, technical strategy, and capabilities.

The e-commerce titan confirmed the listing’s legitimacy by confirming the announcement to the Insider.

“You’ll need to operate with a high level of autonomy and operate analytically, working backwards from data and customer insights to build new and innovative solutions to unsolved problems. As a product leader you will have a proven track record of creating a strong vision and roadmap and successfully delivering results,” Amazon added to its job listing site.

Amazon was “inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like Amazon,” a spokesperson told the Insider.

This came as a shock since the Seattle-based company was extremely vocal in the past towards its stance regarding accepting cryptocurrency as a payment. However, it is worth highlighting that Amazon already has a managed blockchain service in its cloud division, Amazon Web Services (AWS).

Amazon Managed Blockchain is a fully controlled service that simplifies joining public networks or creating accessible private networks by employing famous open-source frameworks such as Ethereum. This will allow multiple parties to perform transactions without a central entity.

Back in 2017 – the recently appointed CEO Andy Jassy and former head of the AWS division – announced in a statement that Amazon’s AWS department was not buying into the blockchain hype and not interested in switching its focus to the technology that is capturing everyone’s attention.

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Jack Dorsey announces Bitcoin plans for Twitter

Daryn Kara Ali



Twitter CEO Jack Dorsey confirmed to investors the significant role Bitcoin will play in the platform’s future by planning to incorporate cryptocurrency into the company’s current products and services.

Dorsey has been a die-hard Bitcoin advocate since its inception into the market, but now the world is witnessing his commitment to cryptocurrency as he plans on integrating Bitcoin into his platform’s commerce and subscription services, alongside some of its contemporary additions like Tip Jar and Super Flows.

Actions the tech philanthropist is planning on implementing into his platforms have not yet been announced in detail.

Today, as one of Bitcoin’s biggest supporters, Dorsey is proposing to investors to move the company faster in terms of Twitter’s product expansion, while emphasizing on how it is the ideal candidate to be the next native currency of the internet.

“If the internet has a native currency, a global currency, we are able to move so much faster with products such as Super Follows, commerce, subscriptions, Tip Jar, and we can reach every single person on the planet because of that instead of going down a market-by-market approach,” Dorsey explained in a statement.

This announcement will be the first time that Dorsey publicly addressed the topic of integrating Twitter with digital currencies, while adding that the platform cannot be the only social networking app considering the pursuit of crypto strategies.

He further highlighted that Facebook was backing blockchain-based payment system, Diem.

Back in February, Twitter chief launched a $23.6 million Bitcoin fund with popular Hip Hop artist Jay Z as a new plan to fund Bitcoin development into other hardware company Square Inc.

This will lead Square into decentralized financial services into the Bitcoin market as blockchain technologies and cryptocurrency could change the company’s business.

Now, Dorsey’s biggest goal is to label Bitcoin as one of the three main elements in Twitter’s future, parallel to Artificial Intelligence and decentralization – which Twitter is shadowing through its “Bluesky” initiative.

Bluesky initiative is a non-profit social networking protocol with the intention of creating a decentralized standard for social media platforms, including Twitter. Dorsey spoke of expanding the concept of decentralization on social media platforms while addressing some of the biggest centralized entities such as Google and Facebook.

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