On Wednesday, the cyrpto market tumbled after China banned financial and payment institutions from providing cryptocurrency services.
Bitcoin, the most popular cryptocurrency, had already dropped low this week after Tesla CEO, Elon Musk tweeted that Tesla will not be accepting Bitcoins as a form of payment. After the ban from China, Bitcoin dropped to $36,250, a 15% drop in the trading session; it’s lowest since February. Another highly valued cryptocurrency, Ethereum fell to as low as $1,850, its weakest level since late January as well.
Bitcoin tumbled 40% from a record high of $64,895 hit on April 14.
Why did China ban cryptocurrency
China’s announced on Wednesday that it will be banning financial institutions and payment companies from providing services related to cryptocurrency transactions exacerbated selling. China also warned investors against speculative crypto trading.
According to People’s Bank of China, speculative trading of cryptocurrency has rebounded, which is infringing on safety of people’s property. The document released by PBoC also mentions that crypto trading is disrupting normal economic and financial order in the country, where virtual currency is banned and not protected by law.
“The crypto markets are currently processing a cascade of news that fuel the bear case for price development,” said Ulrik Lykke, executive director at crypto hedge fund ARK36.
“News like this can get a lot of traction and easily stir market sentiment but they often prove of little significance in the long term,” he added.
Will India also put a ban on cryptocurrency?
As of now, it is very less likely that India will put a ban on cryptocurrency, despite having done it before in 2018. According to an Economic Times, the central government may form a fresh panel of experts to study the possibility of regulating cryptocurrency in India.
After this report, the founder of WazirX, Nischal Shetty, tweeted, “Finally, India plans to regulate & not ban Crypto. The 2019 bill is outdated. It’s amazing to see progressive thought from our Government.”