Bitcoin plunges as social media cracks down on cryptocurrency ads
Volatile bitcoin took another punch to the gut.
Bitcoin briefly fell below $8,000 because of concerns that top social media companies are no longer running ads tied to cryptocurrencies. Twitter is the latest to take action against crypto ads.
The company confirmed in a statement to CNNMoney Tuesday that it has banned ads for initial coin offerings and token sales.
Initial coin offerings, or ICOs, allow companies to raise money, often by crowdfunding, through the sale of their own cryptocurrencies or digital tokens.
Google said earlier this month that it will begin restricting some crypto ads in June.
And Facebook announced in January that it was prohibiting the sale of ads that “promote financial products and services that are frequently associated with misleading or deceptive promotional practices” — which included ICOs and bitcoin.
The moves come as regulators around the world, including the Securities and Exchange Commission, warn that some ICOs are scams and have begun to crack down on alleged ICO fraud.
Some publicly traded companies have decided to cash in on the crypto craze. A small beverage company formerly known as Long Island Iced Tea Co. changed its name to Long Blockchain, and Kodak launched its own Kodakcoin crytpocurrency.
To that end, the Twitter spokesperson said the company would prohibit the ICO and token ads around the world to ensure “the safety of the Twitter community.”
The ban on crypto ads are clearly taking a toll on bitcoin as well as other popular cryptocurrenies such as ethereum, litecoin and ripple.
But is the selling overdone? There is a difference between bitcoin and sketchy ICOs from tiny companies.
“There is no doubt that we are way oversold,” said Naeem Aslam, chief market analyst at Think Markets, in a report Tuesday. He was referring to bitcoin and other major cryptocurrencies as well. And he thinks bitcoin may soon hit a bottom.
“Most of the investors that we are talking to, they only want to buy at [the} current price,” Aslam said.
Bitcoin has plunged more than 40% this year. Prices were near $20,000 in December.