Bitcoin Fell Below $40,000 for the First Time Since Feb. 9

On May 18, bitcoin declined more than 13% to hit an intraday low of $38,585.86 at around 12:54 a.m. ET. It was the lowest point in several months, as the last time it dropped below $40,000 was on February 9. Negative news over the past week affected the world’s largest cryptocurrency.

One week ago, Elon Musk made an unusual announcement. Customers can no longer use bitcoin to buy cars offered by Tesla. The company mentioned environmental issues over the so-called computational “mining” process. This is where powerful computers are used to solve complex mathematical puzzles to enable transactions using bitcoin.

Elon Musk’s comments caused over $300 billion to be wiped off the entire cryptocurrency market on May 12. Several months ago, the company bought $1.5 billion worth of bitcoin. Tesla also accepted bitcoin as a form of payment.

China and bitcoin

Tesla’s decision is not the only problem as China also made a decision that affected bitcoin. On May 18, three Chinese banking and payment industry bodies issued a statement. The three industry bodies are the National Internet Finance Association of China, Clearing Association of China. The last one is the China Banking Association.

They warned financial institutions not to conduct crypto-related business, including trading or exchanging fiat currency for cryptocurrency.

The country banned financial institutions and payment companies from providing services related to cryptocurrency transactions. It also warned investors against speculative crypto trading.

It was the country’s latest attempt to take measures against the digital trading market. Under the ban, financial institutions including banks must not offer any service that involves cryptocurrency. So, they can’t provide saving, trust or pledging services of cryptocurrency. Financial institutions won’t be able to issue any financial product related to cryptocurrency.

The country banned crypto exchanges and initial coin offerings, but it is not illegal to own cryptocurrencies.

For several years, China has been trying to deal with the cryptocurrency market. In 2017, the country closed its local cryptocurrency exchanges, smothering a speculative market that accounted for 90% of global bitcoin trading.

Two years ago, the People’s Bank of China issued a statement. The country’s central bank made the decision to block access to all domestic as well as foreign cryptocurrency exchanges and Initial Coin Offering websites. The central bank’s statement also underlined the risk of cryptocurrency trading.

Traders in China once accounted for a huge share of the bitcoin market, but many Chinese cryptocurrency operations moved abroad in recent years.

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