Bitcoin plummeted to a four-month low after China placed a ban on financial institutions and payment systems from providing services related to cryptocurrency transactions and warned investors against engaging in speculative trading in virtual money. Under the banks, all financial institutions including banks and online payment channels are prohibited from offering customers any cryptocurrency-related services such as registration, trading, clearing, and settlement.
Furthermore, institutions are not allowed to provide custody, fiduciary and collateral services using cryptocurrencies, or issue financial products related to cryptocurrencies. According to Chinese authorities, virtual currencies are “not supported by real value“, their prices are easy to manipulate, and trading contracts are not protected by national law.
In addition to Bitcoin, most of the other cryptocurrencies also saw a massive drop, with Ether falling by 23% in the last 24 hours, canceling all recent gains. The digital currency is now trading at $2,654, still a notch above its usual $1,800-2,000 price.
Before this particular event, Elon Musk also caused Bitcoin to drop by announcing that Telsa has stopped accepting Bitcoin due to “environmental reasons”. He stated that the automobile-maker is looking for eco-friendly alternatives to the popular cryptocurrency.