What happened

Cryptocurrency assets like Coinbase Global (NASDAQ: COIN) and crypto-currencies Dogecoin (CRYPTO: DOGE), Ethereum (CRYPTO: ETH), and Bitcoin (CRYPTO: BTC) were down between 3% and 5% this morning but have since recouped more than half of the losses.

So what

Sudden movements in the cryptocurrency space are nothing new; However, the past week has seen a large divergence between prices and other risky assets like the Invesco Trust QQQ (NASDAQ: QQQ).

Bitcoin price data by YCharts

As global stock markets plunged on Monday, prices for all cryptocurrency-related assets fell. Yet, as the markets rallied on Tuesday, cryptocurrency prices remain under pressure. The trend of underperformance has been in place since mid-May.

Bitcoin price data by YCharts

Now what

There is no indication that the sale will end anytime soon. Bitcoin trading volume on the biggest exchanges fell 40% in June. Having said that, volume cannot be the primary factor. While institutional Bitcoin-related products have seen exits in nine of the past 10 weeks, the reverse has been true for Ethereum. And its price is also down by more than 50%.

Image source: Getty Images.

Perhaps the best explanation is China’s continued crackdown on cryptocurrency miners. The country is preparing to launch its own digital currency. At the end of June, he ordered operations halt in some provinces that were responsible for at least half of all Bitcoin mining energy on earth.

Adding salt to the wound, US Federal Reserve Chairman Jerome Powell recently said creating a digital dollar was a high priority. The half-full glass point of view is that governments are validating the concept and usefulness of cryptocurrency. For now, the half-empty perspective dominates.

Earlier today, the Securities and Exchange Commission revealed that it had put an end to an alleged cryptocurrency-based Ponzi scheme run by an 86-year-old woman and her 54-year-old son. News like this certainly won’t help change negative sentiment.