The "culprit" for the next turmoil in the crypto market is not Elon Musk Bitcoin, the most popular cryptocurrency, fell 12.66% yesterday, dropping to $ 38,586 per share at one point. Earlier this year, bitcoin cost almost $ 65,000.
In the morning news, the media pointed out the change in the attitude towards Bitcoin of the CEO of Tesla Elon Musk as the reason for the collapse. But this reason does not sound convincing. The problem is of a completely different nature.
China yesterday banned financial institutions and payment companies from providing services related to cryptocurrency transactions and warned investors about speculative trading in virtual money, Reuters reported.
Institutions, including banks and online payment systems, can no longer offer cryptocurrency-related services such as registration, trading, clearing and settlement to their customers. This is stated in a joint statement of three Chinese financial institutions: the National Internet Finance Association, the Banking Association and the Settlement and Clearing Association.
"Recently, cryptocurrency prices have jumped and fallen, and speculative cryptocurrency trading has recovered, seriously encroaching on people's property and disrupting normal economic and financial order," the joint statement said.
The statement also highlights the risks of trading cryptocurrencies related to the fact that virtual currencies are "not backed by real values" and their exchange rates are easy to manipulate, and cryptocurrency trading contracts are not protected by Chinese law. However, individuals can still legally own cryptocurrencies.
Earlier, in 2017, China banned the operation of local cryptocurrency exchanges. This was the first step to stifle the speculative market, which accounted for 90% of world bitcoin trade.
In June 2019, the People's Bank of China issued a statement stating that it would block access to all domestic and foreign cryptocurrency exchanges and initial coin supply websites in order to restrict all cryptocurrency trading.