Over the past few days, Bitcoin, alongside other cryptocurrencies, has continued to show extreme volatility. On Wednesday, Bitcoin plunged by nearly 30%, dipping to a low of $30,101 after China had announced its plan to tighten restrictions on financial institutions accepting and providing cryptocurrency payments and services.
Other related cryptocurrencies such as Ethereum and Dogecoin fell 25% and 40% respectively, and data showed that over the past day, more than $8.4B worth of positions had been liquidated in the cryptocurrency market.
The cryptocurrencies experienced a slight recovery after Tesla's Elon Musk and Ark Invest's Cathie Wood had made public statements in support of Bitcoin. Elon Musk had tweeted that Tesla would not be selling their Bitcoin investments, and as a result, Bitcoin recovered its losses experienced during Wednesday to only 8%. However, Tesla's stock closed 3.5% lower by the end of the day.
Other major cryptocurrency exchanges such as Coinbase (NASDAQ: COIN), Riot Blockchain (NASDAQ: RIOT), and Marathon Digital Holdings (NASDAQ: MARA) saw drops in their stock prices as well.
Many stocks also dipped lower on Wednesday after the Federal Reserve had announced that their monthly purchasing of government bonds, originally a strategy to help stimulate the US's economic recovery from the effects of the pandemic, might be tapered if the economy continues to see strong improvement going into the future.
Overall, strong inflation fears continue to shake the market and drive stock prices lower, despite the Fed assuring that such rises in prices would only be temporary.