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Bitcoin plummets after China’s crypto crackdown

Last May 19, Bitcoin’s price fell 14% in under 24 hours after China reiterated its ban on cryptocurrencies. The top-performing digital asset plunged to US$30,202, reaching its lowest value since its bullish movement that started in January 2021.

The National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China announced on May 18 its unified crackdown on cryptocurrencies, barring financial institutions from accepting digital coins in transactions.

Aside from Bitcoin, other digital currencies including Ethereum and Dogecoin plunged 27% and 29% respectively after China’s announcement.

‘Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order,’ they said in a joint statement.

Bitcoin’s price rebounded to US$39,449 as of press time but has yet to recover the losses from the China crypto ban.

The crypto ban imposed by the Chinese government still follows the guidelines set by the 2017 crypto ban. However, it has an expanded scope of prohibiting crypto services, citing that there’s no real support value from these digital tokens and that the crypto market is easy to manipulate.

Chinese banks were also urged to increase their monitoring of monetary transactions involved in crypto trading and coordinate with the government in identifying such activities.

These three Chinese institutions warned investors against speculative crypto trading but have yet to take action on banning digital currency transactions between private consumers.

Bitcoin’s continued decline

On May 13, a week before China’s crypto ban, Bitcoin dropped 4.5% from its US$50,000 price cap after Tesla withdrew from using the cryptocurrency as payment for its products. The company cited the decision was prompted by the dangerous effects of Bitcoin on the environment.

In a recent tweet by Tesla CEO Elon Musk, he said that the company was concerned about the rapidly increasing use of fossil fuels, especially coal emissions, to power Bitcoin mining and blockchain transactions.

‘Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,’ Musk posted on Twitter.

Despite the withdrawal from the Bitcoin payment program, Musk assured his followers that Tesla isn’t going to sell off the US$1.5 Billion investment in Bitcoin.

‘Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy,’ Musk explained. He also mentioned that Tesla is also looking for alternative crypto assets that use less than 1% of Bitcoin’s energy consumption to add to the company’s payment transactions.

Get the latest cryptocurrency updates and cryptocurrency news about Bitcoin’s price volatility right here at Cryptoshimbun!

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