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Bitcoin Tumbles Below $39,000 After China Issues Warning

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Bitcoin plunged below $39,000 for the first time in more than three months Wednesday after China said cryptocurrencies would not be allowed in transactions and warned investors against speculative trading in them.

The comments sent the unit diving more than 10 percent and dealt it another blow soon after being battered by comments from tycoon Elon Musk and his Tesla car company.

Trading in cryptocurrencies has been banned in China since 2019 to prevent money laundering as leaders try to stop people from shifting cash overseas. The country had been home to around 90 percent of the global trade in the sector.

And in a statement, three state-backed industry associations — the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China — said “cryptocurrency prices have skyrocketed and plummeted, and cryptocurrency trading speculation activities have rebounded”.

The price fluctuations “seriously violate people’s asset safety and disrupt normal economic and financial order”, said the statement, which was posted to social media by the People’s Bank of China.

The notice warned consumers against wild speculation, adding that the “losses caused by investment transactions are borne by the consumers themselves”, since Chinese law offers no protection to them.

It reiterated that providing cryptocurrency services to customers and crypto-based financial products was illegal for Chinese financial institutions and payment providers.

Bitcoin tumbled Wednesday from $45,600 to $38,570, its lowest since early February, and well off the record high of $64,870 seen as recently as last month. Analysts have warned it could go down as far as $30,000.

“This is the latest chapter of China tightening the noose around crypto,” Antoni Trenchev, managing partner and co-founder of London-based crypto lender Nexo, said.

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