Bitcoin, Dogecoin see big drops after China reiterates ban on crypto services

Bitcoin, Dogecoin, Ethereum and seemingly every cryptocurrency out there took a big hit Wednesday following the news of China reconfirming its criticism of the crypto service. This appeared to contribute to a sell-off across the board and is even affecting the stock market. 

The China Internet Finance Association said it will not allow the country’s financial institutions to partake in any business related to cryptocurrency due to the volatile nature of the digital coins, according to a Chinese media report Tuesday that was spotted earlier by Coindesk. This move isn’t new. China took a similar stance back in 2017, which also resulted in a massive Bitcoin selloff. 

“The price of virtual currency has soared and plummeted, and virtual currency trading speculation has rebounded, which has seriously violated the safety of the people’s property and disrupted the normal economic and financial order,” the report says via Google Translate. “In order to further implement the requirements of the ‘Notice on Preventing Bitcoin Risks’ and ‘Announcement on Preventing Token Issuance Financing Risks’ issued by the People’s Bank of China and other departments to prevent the risks of speculation in virtual currency transactions.”

Bitcoin’s price dropped sharply Wednesday morning to a low of just below $32,000. It has since rebounded to $37,000, according to Coindesk, which still makes it a loss of 12% for the day. Ethererum and Dogecoin also saw drops at about the same time and are down 12% and 13% respectively. 

Since the start of the pandemic, Bitcoin, along with other cryptocurrencies, saw its value climb, reaching a peak of almost $65,000 in April. Since then, the price has been coming down because of growing concern about the large energy consumption required for Bitcoin. Last week, Tesla CEO Elon Musk said his company would no longer accept Bitcoin as payment because its use is increasing the burning of coal for power.