Crypto Crash Abates As Bitcoin Bounces Back To $42,000

On Wednesday, May 19, 2020, the flagship cryptocurrency, bitcoin, fell to more than three-month lows, dropping to about $30,000 at one point for a pullback of more than 30%.

Bitcoin crash wiped out more than $500 billion in value from the coin’s peak market value, erasing all the gains it clocked up following Tesla Inc.’s announcement that it would use corporate cash to buy the asset and accept it as a form of payment for its vehicles in February. Ethereum, the second-biggest coin, sank more than 40%, while the joke token Dogecoin lost 45%.

However, this week, the crypto markets have shown signs of recovery as Bitcoin hovers near the $42,000 mark.

The bitcoin retreat comes after the Treasury announced the Biden administration’s proposal to strengthen tax compliance includes a requirement for transfers of at least $10,000 of cryptocurrency to be reported to the Internal Revenue Service.

Crypto prices crashed last week after Tesla Inc. billionaire Elon Musk criticized Bitcoin for wasting energy and backtracked on a decision to allow crypto transactions. Losses further accelerated after China announced new steps to restrict crypto mining in the country as well as all financial operations in cryptos.