In brief

  • Bitcoin has fallen below a key threshold, pulling the rest of the market with it.
  • The news follows Chinese banking and payment associations' reiteration of a 2017 crypto ban.

Bitcoin, the largest cryptocurrency by market cap, hit an intraday low of $39,040 on Wednesday morning, according to data from CoinGecko. This is nearly a 40% drop from the cryptocurrency's all-time high of $64,804 in February. 

The price plunge comes on the heels of three Chinese banking and payment associations issuing a statement that reiterated the central bank’s crypto ban from 2017. The group warned financial institutions not to conduct business related to cryptocurrencies, including trading or exchanging fiat currency for cryptocurrency. 

The statement also highlighted the risks of cryptocurrency trading, saying that virtual currencies are not backed by real value, their prices are easily manipulated, and crypto traders are not protected by Chinese law.

A second plunge

Just a week ago, Bitcoin was changing hands above $57,000, but it saw a dramatic drop in price following Elon Musk's announcement that Tesla will no longer accept BTC as payment for its eclectic vehicles.

Musk again stole the spotlight over the weekend, raising concerns over the environmental damage caused by cryptocurrency mining and hinting that Tesla could offload all of the company’s BTC stash. 

Though the Tesla CEO later clarified that the company had not sold its Bitcoin, the cryptocurrency's price dropped by a further 15%.

Musk's U-turn on Bitcoin came just three months after Tesla bought $1.5 billion worth of Bitcoin and said it would start accepting BTC as a payment option.

Bitcoin’s latest price plunge has practically brought Tesla’s crypto holdings back to net zero. When the company purchased cryptocurrency on February 8, it was trading around $39,000.

The overall market is deep in the red on Wednesday morning as well, with Ethereum, the second-largest cryptocurrency by market cap, tumbling by almost 15% to less than $3,000. 

Other major coins, including Binance Coin (BNB), Cardano (ADA), Bitcoin Cash (BCH), and Musk’s new darling Dogecoin (DOGE), have seen double-digit losses, shedding roughly $300 billion from the entire cryptocurrency market in the past 24 hours.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.