Bitcoin's price has fallen to its lowest point in recent months after China has issued a new wave of restrictions, limiting its use. The move, which also affects all other cryptocurrencies, means that financial institutions and payment companies are unable to provide cryptocurrency services, such as transactions, in China.
News that caused panic on the markets
Other affected services include registration, trading and agreements, according to Chinese industry bodies, the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China.
The aforementioned groups have also warned users against speculative trading in cryptocurrencies. Furthermore, they declared that it is necessary to do so in order not to "destroy the normal economic and financial order". The groups added that cryptocurrency token prices have "skyrocketed and plummeted" recently.
The price of Bitcoin, the most important cryptocurrency in the world, dropped below $ 40.000 on Wednesday morning, for the first time since the beginning of February this year following the news.
It is now worth around $ 40.250, down 10,6% in the past 24 hours, as of this writing. The value of all Bitcoins in circulation is around $ 755 billion.
However, Bitcoin does not appear to be the only cryptocurrency interested in the collapse. According to data from CoinMarketCap, tokens across the board have plummeted in price over the past week.
Ethereum, the second most valuable cryptocurrency in the world, fell 15% to one quotation about $ 3.000. Dogecoin is also down about 15 percent. The most popular new tokens recently such as Shiba Inu and SafeMoon fell by around 22% and 20% respectively.
It is not just China's fault
The drop in Bitcoin in particular is just the latest in a sharp downward trajectory for the price of the cryptocurrency over the past week. This is also driven in part by the announcements made by US billionaire Elon Musk.
On May 12, Musk announced that his electric car company Tesla would no longer accept Bitcoin as a payment method. For what reason? He would have cited environmental concerns.
He said the trend of using energy for Bitcoin mining and transactions in recent months has been "insane". The recent crackdown in China on cryptocurrencies is certainly not unique. In fact, it is not the first time that the country has put in place restrictions on its use; the country has long been concerned with this technology.
In 2017, China shut down national cryptocurrency exchanges, and in 2019 the People's Bank of China said it would block access to exchanges based in other countries as well. Currently Chinese citizens are able to own cryptocurrencies, but more and more people have nothing to use them with.