Bitcoin tumbles below US$40,000 after China issues warning
20 May, 2021
Bitcoin plunged below US$40,000 for the very first time in even more than 90 days on Wednesday (May 19) after China said cryptocurrencies would not be allowed found in transactions and warned investors against speculative trading found in them.
The comments sent the unit diving a lot more than 10 % and dealt it another blow immediately after being battered by comments from tycoon Elon Musk and his Tesla car company.
Trading in cryptocurrencies features been banned in China since 2019 to prevent money laundering as leaders try to stop persons from shifting money overseas. The country had been home to around 90 % of the global trade in the sector.
In a statement, three state-backed industry associations - the National Internet Finance Association of China, the China Banking Association and the Repayment and Clearing Association of China - said "cryptocurrency prices have skyrocketed and plummeted, and cryptocurrency trading speculation activities have rebounded".
The purchase price fluctuations "seriously violate people's asset safety and disrupt normal economical and financial order", said the statement, that was posted to social media by the People's Bank of China.
The notice warned consumers against wild speculation, adding that the "losses due to investment transactions are borne by the consumers themselves", since Chinese law offers no protection to them.
It reiterated that providing cryptocurrency offerings to customers and crypto-based financial products was illegal for Chinese finance institutions and payment providers.
Bitcoin tumbled on Wednesday from US$45,600 to US$39,240, its lowest since early on February, and well off the record most of US$64,870 viewed as recently as last month. Analysts have warned it could go down as far as US$30,000.
"This is the latest chapter of China tightening the noose around crypto," Antoni Trenchev, managing partner and co-founder of London-based crypto loan company Nexo, said.
Adam Reynolds of Saxo Markets added: "It's no real surprise if you ask me, as Chinese capital controls could be challenged by cryptocurrency buys in the united states and transfers out of your country.
"So avoiding make use of them in the country is essential to maintaining capital controls."
Bitcoin has already established a torrid couple of days. It took a heavy hit at the start of the week after Musk appeared to advise Tesla was planning to sell its big holdings of the unit. And that came times following the electric car huge said it could halt employing it in transactions because of environmental concerns.
China is amid a wide-ranging regulatory crackdown on its fintech sector, whose biggest players - including Alibaba and Tencent - have been reach with big fines after appearing found guilty of monopolistic practices.
The central bank in addition has sought to promote its heavily regulated digital yuan, which it is testing in the united states in pilot schemes.
Consumers already widely employ mobile and online repayments, however the digital yuan could allow the central bank - rather than the big tech giants - greater data and control over obligations.
Source: www.channelnewsasia.com