The Chinese authorities have recently banned the financial institutions and payment companies in the country from offering crypto-related services to customers. It also warned the investors against speculative cryptocurrency trading in the country.
Due to this ban, on May 19, the value of Bitcoin tumbled below the range of $40,000, which also dragged down the price of other cryptocurrencies.
Bitcoin, whose market was already declining because of the series of tweets from Elon Musk, the CEO of Tesla, experienced a great fall and reached as low as $38,514, after China’s announcement.
However, at around 0855 GMT, the market of the world’s largest cryptocurrency recovered to $40,627, it was still below 5 percent on the session.
As per the report, the three financial bodies in China, including the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China, jointly made the announcement regarding the cryptocurrency-related ban in the country.
The crypto trading market was rapidly growing in China, in order to clamp it down, the authorities decided to ban it. The financial bodies further claimed that cryptocurrency trading involves a lot of risks.
While making the announcement, the financial bodies stated, “Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
Notably, the cryptocurrency exchanges and initial coin offerings have been banned in the country, the individuals are still allowed to hold digital assets.
This is not the first time, the country took a decision against the cryptocurrency industry. In 2017, the local cryptocurrency exchanges were shut, quashing the speculative market that accounted for 90 percent of global bitcoin trading.
Although the ban was imposed thinking of maintaining China’s economic order, it affected the global crypto market. As because of this the cryptocurrency market, which on April 14 reached an all-time high of $64,895, tumbled around 40 percent.
Since November 2018, this would be the first time the cryptocurrency market headed for its first monthly decline.
Coingecko released data showing that the fall in the price of Bitcoin also affected the market of other cryptocurrencies. The Ethereum blockchain linked coin, Ether, experienced a decline of 12 percent and reached $2988 and on the other hand, dogecoin collapsed to 18 percent.
During the pre-market trading, the shares of the cryptocurrency exchange collapsed 4 percent. In April, as the cryptocurrency market reached its peak, Nasdaq enlisted Coinbase on its platform. On May 18, the data released by Nasdaq shows that Coinbase lost 45 percent of its share.
Last week, Musk announced that Tesla would not be accepting the Bitcoin payment, since then the cryptocurrency market started declining. His subsequent tweets confused the audience regarding his company’s investment in Bitcoin.
Ulrik Lykke, the executive director at crypto hedge fund ARK36, has shared his views on the recent dip that the cryptocurrency market is experiencing. He said, “The crypto markets are currently processing a cascade of news that fuel the bear case for price development.”
A few of the cryptowatchers have predicted more loss in the future. According to them, if the market goes below $40,000, more cryptos would be sold during that short time period.