Bitcoin prices rallied Monday after plunging close to $7,000 yesterday amid rumors of an impending Twitter ban on cryptocurrency advertising.
The price of one bitcoin token (BTC) hovered at $8,417 as of this writing, up 2.7% from 24 hours earlier. Bitcoin's price hit a low of $7,336 on Sunday before staging a tentative comeback, according to CoinDesk.
Not surprisingly, the BTC rally fueled a similar uptick among all 10 of the top 10 most valuable cryptocurrencies by market cap.
Ripple climbed more than 4%, while Tron and Ethereum Class both gained 10% during the past 24 hours. Eos gained 20%, and Qtum rocketed more than 37%.
The temporary recovery was welcome relief after the entire digital currency market tumbled last week when search engine giant Google announced it will ban crypto ads starting in June.
Scott Spencer, Google's director of sustainable ads, said the corporate giant stepped in to protect users from potential fraud. (See also: Coinbase Sued for Insider Trading of Bitcoin Cash.)
"We don't have a crystal ball to know where the future is going to go with cryptocurrencies, but we've seen enough consumer harm or potential for consumer harm that it's an area that we want to approach with extreme caution," he explained. (See also: Bitcoin Price Swings Resemble Dotcom Crash: Morgan Stanley.)
Rumors of Twitter Crypto Ban Roils Market
The Google ban followed a similar move by social media juggernaut Facebook, which banned cryptocurrency ads in January 2018. Facebook product management director, Rob Leathern, explained the move in a blog post:
"We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception. That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith."
Rumors are now swirling that Twitter could enact a similar ban. According to Sky News, the microblogging platform is considering banning crypto advertisements as well as ads for cryptocurrency exchanges.
The news site reported that the new advertising policy "will be implemented in two weeks and currently stands to prohibit advertisements for initial coin offerings (ICOs), token sales, and cryptocurrency wallets globally."
Twitter has not confirmed the rumors, but a ban wouldn't be surprising, since Twitter has already suspended the accounts of online scammers who posed as celebrities to steal people's cryptos.
Tesla billionaire Elon Musk revealed he was a victim of such an impersonation and reported it to Twitter co-founder Jack Dorsey. (See more: Elon Musk Reveals How Much Bitcoin He Owns.)
Observers say the ban by Google, Facebook, and potentially by Twitter could have a chilling effect on the market. "Much of crypto demand is retail, so this may negatively impact demand," Joe DiPasquale, CEO of BitBull Capital, told CNBC.
DiPasquale added that the high cost of bitcoin mining has also put pressure on its price. It now costs about $8,000 to mine one BTC token, which is roughly equivalent to its market price, so miners are basically breaking even. (See more: Bitcoin Miners No Longer Turning a Profit.)
"There's less incentive for miners to continue to keep machines on unless they are in a lower-cost energy area or have a way of producing at less than cost," DiPasquale said.
Twitter Billionaire Jack Dorsey Backs Blockchain
But not all is doom and gloom, since billionaire Jack Dorsey is apparently bullish on bitcoin, as evidenced by his financial support of blockchain startup Lightning Labs.
The Silicon Valley-based Lightning Labs, which aims to speed up bitcoin transaction times, has received $2.5 million in seed funding from tech luminaries, including:
- Litecoin creator Charlie Lee
- Square Inc. and Twitter co-founder Jack Dorsey
- Former PayPal COO David Sacks
- BitGo CTO Ben Davenport
- Eventbrite co-founder Kevin Hartz
- Venture capital firm Digital Currency Group
- Robinhood co-founder Vlad Tenev.
Granted, $2.5 million is not a lot of money for a group with such deep pockets, but it's still a vote of confidence by some of the smartest people in fintech that they believe in bitcoin and blockchain, the technology that undergirds crypto. (See more: Billionaire Jack Dorsey Bets on Blockchain Startup.)
Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns no cryptocurrencies.