Bitcoin sinks 8% as crypto market volatility again rears its head
- Bitcoin falls more than 8% Friday as part of a wider slump in the cryptocurrency market.
- South Korea is reportedly set to levy a 20% tax on crypto transactions starting next year.
- The value of the global cryptocurrency market has slid to $1.6 trillion during May.
Bitcoin dropped by more than 8% to trade under $36,000 during Friday's session, slumping alongside other cryptocurrencies as the market starts wrapping up a month rocked by regulatory threats and Tesla's about-face on accepting bitcoin as payment.
The world's largest cryptocurrency lost as much as 8.5% at $35,178 but trimmed the loss to 7.5%. It again lost grip of the $40,000 level it had reached on Thursday. Meanwhile, ether, the token of the Ethereum blockchain, fell nearly 7%, Binance Coin lost 8%, as did Cardano-ADA, and Dogecoin moved 6% lower.
Volatility in the crypto market was showing signs of a pickup on Friday. The Crypto Volatility Index climbed above 133 after falling to roughly 127. The CVI has soared from the 80 level at the start of May, but is off its recent high close to 183.
Downbeat crypto news flowed through the market Friday, led by South Korea moving ahead with its plan to impose a 20% levy on cryptocurrency transactions beginning in 2022, Yonhap News Agency reported. Gains from virtual assets will need to be reported when filing for general income taxes in May 2023, the report said.
Meanwhile, Bank of Japan Governor Haruhiko Kuroda criticized bitcoin during an interview with Bloomberg. "Most of the trading is speculative and volatility is extraordinarily high," he said. "It's barely used as a means of settlement."
For the month as a whole, bitcoin is facing a loss of roughly 38% after taking a number of blows, including China reiterating its call to restrict mining and trading activities surrounding bitcoin and Tesla saying it would stop taking bitcoin as payment because of the "insane" amount of energy needed to create new coins and secure the network.
But bitcoin's price is poised to regain upward momentum, said Peter Jensen, CEO of RocketFuel Blockchain, in a note.
"BTC always recovers from past dips and surpasses the previous upper boundary/ceiling price," he wrote. "We could see a similar upward trend in the coming months due to the Robinhood IPO and release of Central Bank Digital Currencies from various countries, which is expected to cement crypto as the future medium for trade and settlement."