Bitcoin Dropped To Two-Week Low Due To Fresh Concerns About Chinese Regulations

On Monday, the price of Bitcoin dropped to its lowest point in weeks, owing to reports that China will continue to crack down on cryptocurrencies.

According to CoinDesk statistics, Bitcoin was trading at around $32,291 at noon ET on Monday, down more than 6% in the last 24 hours and a far cry from its all-time high of almost $65,000 in mid-April.

Bitcoin’s decline drove down other cryptocurrencies, such as Ethereum, which has down more than 9% in the last 24 hours.

According to China’s state-run news agency Xinhua, China’s central bank issued a statement on Monday following regulatory consultations with other financial institutions and payment platforms, advising against providing services for virtual currencies. The People’s Bank of China said in a statement that cryptocurrency use increases the danger of criminal behavior and money laundering and that virtual currencies disturb legitimate economic activity.

Alipay, the operator of China’s most popular payment network, as well as a handful of big Chinese institutions, were among those warned not to utilize Bitcoin.

The announcement comes roughly a month after three Chinese state-backed financial institutions released a separate joint statement warning about the risks of cryptocurrencies owing to their volatility and advising members not to engage in the virtual currency-related activity.

Furthermore, over the weekend, Reuters and other foreign news agencies reported that officials in the southwest province of Sichuan ordered Bitcoin mining projects to stop, fueling fears of a Chinese crackdown on cryptocurrency.

Bitcoin surged at the start of the year but has been trending lower in recent weeks. It plummeted in mid-May when Tesla CEO Elon Musk said through Twitter that his firm will no longer take the cryptocurrency as payment, focusing attention on the mining process’s environmental effect. Bitcoin mining necessitates the use of sophisticated computer servers that consume massive quantities of power and, in certain circumstances, fossil fuel energy.

Despite China’s opposition to cryptocurrency use, other nations have welcomed it, and a number of companies have worked to make it popular in the United States. El Salvador, a Central American country, became the first in the world to legalize the use of Bitcoin as a legal currency earlier this month. Venmo, a financial services company located in the United States, has announced that users would be able to buy, trade, and store cryptocurrencies on its app. Venmo’s news follows PayPal’s announcement that customers would be able to make online transactions using cryptocurrency.

The volatility of Bitcoin has alarmed experts, but its steady upward trend since late last year has made many private investors wealthy. Bitcoin is still worth more than three times what it was a year ago, despite Monday’s drop.