Bitcoin has tumbled further in the wake of China’s expanding crackdown on bitcoin mining, as investors grow more uncertain about the future of the leading cryptocurrency.
Bitcoin fell as low as $31,333 on Monday, a two-week trough, dragging down other cryptocurrencies. The world’s biggest cryptocurrency has lost more than 20% in the past six days alone and was at half its April peak of almost $65,000. In the year to date, it remains up about 11%.
China has been tightening its crackdown on cryptocurrencies. On Friday, authorities in the south-west province of Sichuan ordered bitcoin mining projects to close.
Last month the State Council, China’s cabinet, vowed to clamp down on mining and trading as part of a campaign to control financial risks.
On Monday, China’s central bank said it recently summoned some banks and payment firms, including China Construction Bank and Alipay, urging them to crack down harder on cryptocurrency trading.
“People still react strongly to actions from China that create uncertainty so this is likely to reflect negatively on the bitcoin price,” said Ruud Feltkamp, chief executive officer at at crypto trading bot Cryptohopper. “China is rolling its own cryptocurrency and has every incentive to have as little competition as possible ... I think we will see miners leaving China and relocate where there is spare or cheap energy.”
Data on mining is scarce but bitcoin in China accounted for about 65% of global production last year, according to data from the University of Cambridge, with Sichuan its second-biggest producer.
Agricultural Bank of China (AgBank), China’s third-largest lender by assets, said separately it was following the People’s Bank of China’s guidance and would conduct due diligence on clients to root out illegal activities involving crypto mining and transactions.
Alipay, the ubiquitous payment platform owned by fintech giant Ant Group, said in a separate statement it would set up a regulator monitoring system targeting key websites and accounts to detect illegal crypto-related transactions.
In other cryptocurrencies, ether, the token used for the Ethereum blockchain, dropped to a five-week low of $1,890. It was last down 14.3% at $1,922.05.
Also on Monday, auction house Sotheby’s announced that a rare pear-shaped diamond that is expected to fetch up to $15m can be bought at auction next month using cryptocurrencies. It would be the first time a diamond of such size has been offered for public purchase with cryptocurrency.
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