Bitcoin crashes below $38,000

Bitcoin and other cryptocurrencies are plummeting as investor anxiety expands — this time, following China’s latest crackdown on digital currencies.

According to Coindesk numbers, the world’s most heavily traded cryptocurrency has dropped to $30,202 per coin from a peak of nearly $44,000 in the last 24 hours.

Following the opening of the New York stock exchange, bitcoin recovered marginally and was trading at about $37,280, down 15%.

Several other big cryptos were also down on Wednesday, in addition to bitcoin. At its lowest point, Ethereum fell below $2,000 per unit before regaining some of its lost ground. Ether was trading at $2,430 on Wednesday morning, down nearly 30%. Dogecoin, the meme-turned-cryptocurrency, has lost nearly 26% of its value.

As a result of the selloff, cryptocurrency trading sites Coinbase (COIN) and Coindesk experienced outages.

Bitcoin was already on the decline earlier this month after Tesla (TSLA) CEO Elon Musk expressed concern about the cryptocurrency’s environmental effect. However, a recent statement from a group of Chinese financial and banking regulators seems to have stunned cryptocurrency markets even more.

The agencies said on Tuesday that financial institutions and payment companies should not engage in cryptocurrency transactions or offer cryptocurrency-related services to their customers.

“Prices of cryptocurrency have skyrocketed and plummeted recently, and speculative trading has bounced back. This seriously harms the safety of people’s property and disturbs normal economic and financial orders,” said the statement from regulators supervised by the People’s Bank of China and the China Insurance and Banking Commission.

China’s chilly attitude toward cryptocurrency goes back years. While the country doesn’t completely ban cryptos, regulators in 2013 declared that bitcoin was not a real currency and forbade financial and payment institutions from transacting with it. At the time, they cited the risk that bitcoin could be used for money laundering, as well as the need to “maintain financial stability” and “protect the yuan’s status as a fiat currency.”

Cryptocurrencies can be kept or traded by the general public, but major exchanges in mainland China have been shut down. In 2017, authorities outlawed initial coin offerings, a method for tech companies to collect funds by selling crypto tokens to the general public.
The tightening of controls may be in part to support China’s state-backed digital yuan program, which authorities are trying to enforce so that money flows can be closely monitored

Despite the fact that the 2013 notice only listed bitcoin by name, some analysts have interpreted it to include all cryptos, given Beijing’s dislike for them. The latest announcement was identified as a “danger alert in nature” by the state-owned China Times on Wednesday. While not a national law or regulation, it does embody a “industry norm to some degree,” according to the outlet, which cited Zhu Youping, a policymaking think tank official.

Even, it shows that China’s stance on cryptocurrency isn’t likely to change anytime soon, which seemed to be enough to concern traders.


Sign up for the New Frontier Report

Get regularly updated reports detailing stocks recommendations and new economic shifting industries and technologies.

We don’t spam! Read our privacy policy for more info.