Bitcoin Tumbled below $34000 as China cracks down on Crypto-Currencies
Bitcoin tumbled below at $34000 for the first time in three months after China curbs on the latest restrictions on crypto-currencies.
Bitcoin Fell below $34000 as China cracks down on Crypto-Currencies
On Wednesday, Bitcoin falls further at £24,030 ($34000) for the first time in three months after China imposed the latest restrictions on crypto-currencies. In the latest move, China banned banks and payment companies from providing services regarding cryptocurrency transactions. Furthermore, Beijing warned investors against speculative trading of crypto yesterday.
The fall of Bitcoin comes over ten percent last week after Tesla announced that it would no longer accept the currency. Whereas on Wednesday, bitcoin recovered some ground; however, it was still down about -10.4 percent at $38131. At the same time, other digital currencies like Ether, which fueled the Ethereum blockchain network, and Dogecoin lost more than twenty-two percent and twenty-four percent, respectively.
Tesla Inc. Chief Executive @elonmusk said the company has suspended accepting bitcoin as payment for its vehicles.
“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal,” Mr. Musk said Wednesday on Twitter. pic.twitter.com/Q4aFqBoGXf
Simultaneously, shares of Tesla tumbled over three percent on Wall Street, probably because of the electric manufacturer’s exposure to Bitcoin. The owner of Tesla, Elon Musk, still holds almost $1.5 billion worth of the crypto-currency.
The crackdown of Beijing on Crypto-currency
Since 2019, the trading of cryptocurrency is illegal in China to control money laundering and other illicit activities. However, people in China are still able to trade in currencies like Bitcoin online – the main concern of Beijing. On Tuesday, three state-backed firms, including the Payment & Clearing Association of China, the China Banking Association, and the National Internet Finance Association, issued a warning on social media account.
According to these organizations, consumers would have no safety if they were to experience any losses from crypto-currency investment transactions. Furthermore, they added that the latest wild swings in the prices of crypto-currency extremely violate the asset safety of people and are disrupting the regular financial and economic order.
Neil Wilson, the Chief Market Analyst at Markets.com, said that China has been pressurizing the crypto space for some time, but this marks an increase – other nations might follow now as central banks pave the way towards launching their own digital currencies. So far, Western officials have normal policies about Bitcoin, but it might change soon.
Bitcoin Reverses Gains Made in 2021
Exchange Rate of Bitcoin with U.S. Dollar
Exchange Rate of Bitcoin with U.S. Dollar Source: Bloomerg
Tesla Snub
Elon Musk unexpectedly announced in March that the electric car manufacturer would allow customers to acquire using Bitcoin. However, last week, he did a U-turn and postponed vehicle purchases by paying Bitcoin because of climatic concerns. Musk fears center on the mining of Bitcoin – the energy-consuming process through which the cryptocurrency is generated, using high-powered computers. Usually, it depends on electricity generated with fossil fuels, specifically coal.
Musk wrote on Twitter about his concerns about instantly increasing the use of fossil fuels for mining Bitcoin and its transactions, especially coal, which has the worst emissions of any fuel. Furthermore, he said the electric car manufacturer didn’t intend to sell any of its Bitcoin and aimed to reestablish crypto-currency transactions once mining shifted to using more maintainable energy sources. However, Bitcoin can’t be traded in China; over seventy-five percent of Bitcoin mining across the world done in China.
