Bitcoin below $40,000 for first time since February on China crypto warning
Premium- China has reiterated its stance that financial and payment institutions should not deal in digital assets and warned investors against speculative crypto trading
Prices of the world’s biggest cryptocurrency, bitcoin, fell below the $40,000 level for the first time since 9 February after China reiterated its stance that financial and payment institutions should not deal in digital assets and warned investors against speculative crypto trading.
This is not the first time when China had issued such a warning. In 2017, it had shut local crypto exchanges and in 2019 the country blocked access to domestic and foreign cryptocurrency exchanges.
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The latest statement has come from three industry bodies—the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China.
"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," the three bodies said in a joint statement.
At 11.15 am IST on Wednesday, bitcoin was trading 13% lower at $39,204.97 after falling to as low as $39,040.08 during the past 24-hour period, as per CoinGecko. The cryptocurrency is now 40% lower than its all-time high of 64,804.72, which was hit on 14 April 2021.
The sentiment in the crypto market was already soured after Tesla chief Elon Musk last week in a series of tweets expressed concerns over bitcoin’s heavy power consumption.
According to the fear and greed index indicator provided by alternative.me, the bitcoin sentiment is at “extreme fear" level sitting 23, which is lowest since April last year.
Musk in his tweets claimed that 10 times faster and larger blocks on dogecoin are a viable alternative. This led to the speculation that Tesla has exited its bitcoin holdings of $1.5 billion, adding to the downward pressure on bitcoin. However, he later clarified that Tesla was still having exposure to the digital currency.
The Shiba Inu-based meme currency, dogecoin, was also down over 17% at around $0.41. Despite the recent slide, the digital asset is up around 16,057% since last May.
Meanwhile, the world’s second-biggest cryptocurrency, ether, slumped over 16% to trade below the $3,000 level.
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