Bitcoin is tanking following a reiteration from China’s central bank that financial institutions cannot provide cryptocurrency services.
In a statement published online, the People’s Bank of China warned against institutions and businesses from engaging in any form of virtual currency transactions.
“Recently, crypto currency 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,” the document read.
It warned that cryptocurrency trading was not protected by law and cannot be used to purchase goods and purposes.
Bitcoin’s value reacted near instantly.
At 6pm AEST yesterday, Bitcoin was trading just under $60,000 per coin.
At the time of publishing – almost 24 hours later – almost $10,000 worth of value had been wiped off each coin with the current trading price sitting just marginally above $50,000.
It’s estimated more than $100 billion has been wiped off Bitcoin’s total market capitalisation since the announcement was made public.
It’s also the first time Bitcoin’s price has dipped into low $50,000 territory since early February.
Despite the single-day plunge Bitcoin’s ascension from background currency to major trading option has been stratospheric in the past 12 months.
In early April 2020 – during the height of the COVID-19 pandemic – you could purchase a single Bitcoin for as little as $11,000.
Put simply, if you invested $10,000 in Bitcoin then you would be sitting on a cryptocurrency egg just shy of $60,000.
The volatility of the cryptocurrency over the past fortnight has prompted many to criticise what is seen as a high-risk investment.
“If a single Elon Musk tweet can have so much influence over the price of Bitcoin, how can anyone seriously consider it to be money?” Peter Schiff, Chief Economist at Europac.com and long-time critic of cryptocurrency tweeted.
“How can Bitcoin be a safe-haven asset if a one-word tweet puts it at risk? It should be clear by now that buying Bitcoin is gambling, not investing.”
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