China’s intensifying cryptocurrency crackdown has left bitcoin flirting with US$30,000, a price level seen as key to the short-term outlook for the largest virtual currency.
Bitcoin yesterday fell as much as 4.3 percent to US$31,171, and for some a breach of US$30,000 would hurt sentiment and raise the risk of a steeper selloff. It was trading at US$32,850 as of 8am in London.
“We’re most likely going to continue to trade within the US$30,000 to US$40,000 range and, hopefully, US$30,000 will hold as the low of the year,” said Antoni Trenchev, cofounder of cryptolender Nexo in London. “If not, we should revisit US$25,000 and even US$20,000 before the next leg up.”
Photo: Reuters
Beijing’s latest broadside came on Monday, when the People’s Bank of China said it had summoned officials from the biggest lenders, as well as AliPay (支付寶), to reiterate a ban on cryptocurrency services.
“Customers are asked to be more aware of risks, safeguard bank accounts and not to use virtual currency-related transactions,” China Construction Bank Ltd (中國建設銀行) said on its Web site.
Similar promises were issued by Industrial and Commercial Bank of China Ltd (中國工商銀行), Bank of China Ltd (中國銀行), Agricultural Bank of China Ltd (中國農業銀行), Postal Savings Bank of China Ltd (中國郵政儲蓄銀行) and Alipay, operated by Ant Group Co (螞蟻集團).
Promoters of cryptocurrencies say they allow anonymity and flexibility, but Chinese regulators warn that might aid money-laundering or other crimes.
Bank executives were summoned to a meeting at which they were questioned about their activities and told to “maintain financial stability and security,” the central bank said in a statement.
It said cryptocurrency trading “disrupts normal economic and financial order,” and could facilitate money laundering and other crime.
Concerns about the environmental impact of the energy-hungry computers that underpin bitcoin also continue to swirl. Chinese officials are already trying to root out cryptomining operations.
Meanwhile, the prospect of reduced stimulus as the global economy recovers from the COVID-19 pandemic is also sapping the appetite for speculative investments.
Bitcoin’s retreat has dented the argument put forward by advocates like Michael Saylor of MicroStrategy Inc that the virtual currency is a dependable store of value.
MicroStrategy on Monday said it had bought an additional 13,005 bitcoins for about US$489 million at an average price of about US$37,617.
The news did little to bolster prices amid concerns that wider institutional adoption is stalling after Elon Musk and Tesla Inc cooled on bitcoin.
A conclusive break below US$30,000 would mean a “massive hit” to sentiment and possibly “heavy selling activity” across the cryptocurrency market, Pankaj Balani, chief executive officer of digital asset derivatives exchange Delta Exchange, wrote in an e-mail.
Ether, the second-biggest token, at one point slipped 4.2 percent yesterday.
Retail favorite dogecoin fell 22 percent over the past 24 hours.
“Most cryptocurrencies have lost upside momentum versus bitcoin after having outperformed,” said Katie Stockton, founder of investment research provider Fairlead Strategies.
Bitcoin has roughly halved from a record of US$65,000 in mid-April, although over the past year it is still up more than 200 percent.
The wider Bloomberg Galaxy Crypto Index has more than quadrupled over 12 months.
Additional reporting by AP
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