The price of bitcoin fell below $ 40,000 for the first time in months and other cryptocurrencies also fell after the People’s Bank of China apparently warned against using digital coins as a payment.
Bitcoin BTCUSD, -6.95% fell nearly 7% to $ 40,275, bouncing off a 24-hour low of $ 38,585, in a month that left the # 1 cryptocurrency by 28% lower.
Bitcoin has not been trading below the $ 40,000 level since the beginning of February. Ether ETHUSD, -14.18% fell 13% to $ 2,975, a level untouched since early May, just before the cryptocurrency rose to a record high above $ 4,000. Ripple XRPUSD, -8.87% fell roughly 8% to $ 1.48.
The Central Bank Warning
The warning from China’s central bank was posted on its WeChat account, according to analysts and media reports.
Late yesterday in Asia, the PBOC issued a warning about a rebound in virtual currency speculation.
China announced that financial and payment institutions are prohibited from setting prices or conducting business in virtual currencies. The story didn’t have much following overnight, but it seems to be catching on this morning, ”said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.
The People’s Bank of China has also reportedly said that virtual currencies cannot be used as a form of payment because they are not real currencies.
Financial institutions in China cannot facilitate Bitcoin transactions, and exchanges and platforms were banned in 2017 during a crackdown. Many miners, once a huge presence in China, have been forced overseas. Despite this, Bitcoin remains one of the most stable currencies over the long term, and it is possible to start investing using reliable platforms such as Bitcoin Trader, for example.
This Is How China Moved To Create Its Own Digital Yuan
The cryptocurrency space, with Bitcoin in the lead, has been under pressure for several days. A blow came days ago when Tesla’s TSLA CEO Elon Musk, + 0.18%, said the electric car maker would stop sales of cars using cryptocurrency, due to environmental concerns.
Bitcoin also fell earlier this week due to speculation that Musk was divesting the company’s bitcoin holdings, which he later said was not the case.
Meanwhile, Square SQ fintech payments, + 0.12% last week that it has no plans to buy more bitcoin after losing $ 20 million on its $ 220 million investment in cryptocurrency last quarter.
While some Bitcoin enthusiasts remain convinced that cryptocurrency is not just here to stay, but that its value may reach hundreds of thousands of dollars, others are concerned that investors may be in the pangs of a crypto winter.
Some fear that the events of November and December of 2017 will be repeated, when digital assets that had seen a strong acceleration began a protracted slump that didn’t end until about 2019-20.
On Tuesday, Bank of America’s May survey of global fund managers revealed that “long bitcoin” is currently the busiest trade in the world, with 75% saying it is a “bubble.”
Conclusion
“The concern among investors and traders is that perhaps we are about to see another crypto winter and it may be a long time before the price of Bitcoin sees a recovery as the bullish cycle may be over,” said Naeem Aslam, chief market analyst at AvaTrade, in a note to customers.
“The actual answer is that no one really knows and the only thing we know is that institutions continue to buy bitcoin on every dip,” Aslam said, noting Tuesday’s news that business software and bitcoin play MicroStrategy MSTR. , -0.44% had bought another $ 10 million worth of bitcoin.