Bitcoin, Ether slide as China tightens grip by calling crypto-related deals 'illegal'
China makes its most forceful intervention in crypto space - will a meltdown follow?
New York: Bitcoin, Ether and other digital tokens tumbled as China intensified its push to rein in crypto speculation and mining.
Bitcoin fell 7.8 per cent to $41,220 as of 7:41am in New York. The losses were more severe in other coins, with Ether, EOS, Litecoin and Dash all falling more than 7 per cent. Crypto-related stocks also came under pressure, with Marathon Digital Holdings Inc. tumbling 6 per cent in US pre-market trading
China's central bank said all cryptocurrency-related transactions are illegal, according to a Q&A statement on PBOC's website. It's an urgent task for China to root out crypto mining and the crackdown is important to meet carbon goals, according to the guidelines on the website of the nation's economic planning agency.
Setting off a slide
Bitcoin looks headed toward the $40,000 level or lower, Fawad Razaqzada, an analyst at ThinkMarkets, warned. China's strict approach is part of the reason why Bitcoin prices collapsed in May and have struggled to regain previous all-time highs above $60,000.
"The risks are skewed to the downside for now," Razaqzada wrote in a note. "China is the major risk that is likely to keep prices under pressure for a while."
China has brought intense scrutiny on the crypto industry this year amid heightened concerns over risks of fraud, money laundering and excessive energy usage. The country is a dominant player in crypto and as recently as April had a 46 per cent share of the global hash rate, a measure of computing power used in mining and processing, according to the Cambridge Bitcoin Electricity Consumption Index.
In July, the central bank vowed to maintain heavy regulatory pressure on cryptocurrency trading and speculation. China's tough chance is part of the reason why Bitcoin prices collapsed in May and have struggled to regain previous all-time highs above $60,000.