Bitcoin price crash: Digital coin market plummets in wake of Chinese crackdown

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The cryptocurrency market has plummeted again after China commented on digital coins for a second time this week. The market has been in freefall several times this week amid damning comments from SpaceX founder Elon Musk about the environmental impact of digital coin mining and after Chinese authorities threatened to crack down in the mining of cryptocurrencies.

Bitcoin is facing one of its most severe price crashes in its history this week, despite a stabilising effect taking force across the wider crypto market.

The price of the digital coin crashed on Wednesday after China announced new measures to block cryptocurrencies from being used as payment in the country.

The ban would see financial institutions and payment companies unable to offer clients any service involving digital coins, including trading, clearing and settlement.

The statement issued from three industry bodies read: “Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”

Now for a second time in a week, China has threatened to take further action against cryptocurrencies.

The nation today announced plans to enforce a crackdown on digital coins.

Just five minutes after the announcement, the price of Bitcoin plunged by more than six percent and is showing no signs of improvement.

Other large cryptocurrencies are also seeing prices plummet.

In a statement from Chinese Vice Premier Liu He and the State Council, authorities said tighter regulation is needed to protect the financial system.

The statement, released late Friday in China time, said it is necessary to “crackdown on Bitcoin mining and trading behaviour, and resolutely prevent the transmission of individual risks to the social field.”

Bitcoin’s has dropped by 10.88 percent in the 24 hours and is showing a continued trend of decline.

In the past seven days, the cryptocurrency has dropped by 28.80 percent overall as of 5.02pm on May 21.

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According to CoinMarketCap, the global crypto market cap is currently $1.63 trillion (£1.15tn) – which is an 11.48 percent decline in the last day.

The price of Ethereum has dropped 16.87 percent in the past 24 hours and 41.66 percent in the past seven days.

The price of Dogecoin has dropped 15.56 percent in the past 24 hours and 36.59 percent in the past seven days.

The price of self-proclaimed sustainable coin Cardano has dropped 17.87 percent in the past 24 hours and 20.62 percent in the past seven days.

The threat came as a Government report was published in Hong Kong, within which cryptocurrency exchanges were outlined as likely to have to be licensed by market regulators. 

The report suggests only professional investors ought to be able to use them.

Dozens of cryptocurrency exchanges currently operate in Hong Kong, including some of the world’s largest.

The city has an “opt-in” approach which means exchanges can apply to be licenced by markets watchdog the Securities and Futures Commission but they do not have to.

The Chinese announcement came just hours after cryptocurrency lender BlockFi who accidentally sent users huge amounts of Bitcoin as part of a promotion – asked for it back.

The firm set out payouts in Bitcoin instead of US dollars and is now working to reclaim this month.

One user apparently received 700 bitcoin – which would be worth around £21m – rather than $700 (£494).

BlockFi told Bloomberg that it affected fewer than 100 customers.

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