The price of bitcoin tumbled below $40,000 for the first time in months and other cryptocurrencies were pressured on Wednesday, after the People's Bank of China apparently warned against using digital coins as payment, MarketWatch reported.
Bitcoin was last down 12 per cent to $38,180, setting a fresh low for the past 24 hours of $36,219 in a month that has left the No 1 cryptocurrency 31 per cent lower. Bitcoin hasn't traded below the $40,000 level since early February and is roughly 40 per cent below a mid-April record high of $64,829, the report said.
Ether dropped 17 per cent to $2,848, a level not touched since early May, just before the cryptocurrency soared to a record high above $4,000. Ripple dropped around 11 per cent to $1.41.
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"Late yesterday in Asia, the PBOC issued a warning about a rebound in speculation in virtual currencies. China announced that financial and payment institutions are banned from pricing or conducting business in virtual currencies. The story did not get much traction overnight but seems to be picking up steam this morning," said Jeffrey Halley, senior market analyst at Oanda, in a note to clients, as per the report.
The People's Bank of China also reportedly said virtual currencies can't be used as a form of payment because they aren't real currencies. Financial institutions in China cannot facilitate bitcoin transactions, and exchange and platforms were banned in 2017 amid a crackdown. Many miners, once a huge presence in China, were forced abroad. That is as China has been making moves to create its own digital yuan.
The cryptocurrency space, with bitcoin in the lead, has been under pressure for several days. A deep selloff on Monday, led by bitcoin, and meme cryptocurrency dogecoin wiped off over half a billion dollars from the market.
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As per the report, a heavy blow came says ago when Tesla Chief Executive Elon Musk said the electric-car maker would halt sales of cars using the cryptocurrency, owing to environmental worries.
Bitcoin also fell earlier this week, on speculation that Musk was divesting the company's bitcoin holdings, which he later said wasn't the case.
