Bitcoin price collapsed below $ 40,000, which is the first time since February 9, 2021.
Currently, the price of the largest cryptocurrency in the world by market value is estimated at about $ 39,600, according to coinmarketcap, which is the lowest point in 14 weeks.
As usual, alternative digital currencies, with every strong fall of Bitcoin, follow its movement firsthand, as the price of Ethereum has fallen below $ 3,000 and is trading at $ 2,950 at the time of preparing the article.
The cryptocurrency market continued to decline in general during the past week and extended its decline further with the beginning of this week, here are some of the reasons that contributed to the decline of Bitcoin.
Why is Bitcoin dropping below $ 40,000?
Elon Musk’s negative statements towards Bitcoin and the announcement by Tesla to stop accepting Bitcoin as a means of payment made Bitcoin move quickly towards a level below $ 50,000, and fluctuate at $ 44,000 – $ 46,000.
Another negative news appears and it could be the main reason for Bitcoin’s decline to its current levels, which is the confirmation of Chinese industry organizations of old restrictions on cryptocurrencies.
The latest reports from China reveal that many authorities have confirmed their ban on dealing with Bitcoin as a means of payment and preventing financial institutions and payment companies from providing banking services to cryptocurrency traders and related entities.
According to the original report issued by the Chinese authorities, the move stems from high volatility in the cryptocurrency market.
Chinese institutions and authorities confirm their ban on dealing with Bitcoin:
In a joint statement issued by three industrial organizations in the country, it was stated that the high and low prices of cryptocurrencies disrupt the normal economic and financial system.
According to the same report, the three industry bodies that have recently moved against Bitcoin are:
- China Banking Association.
- National Internet Finance Association of China.
- China Clearing Association.
According to the statement, these organizations believe that cryptocurrencies are not supported by real value, in addition to the ease with which their prices are manipulated.
With the restrictions in place now, not all financial institutions, including banks and other payment platforms, can offer their services to customers who deal with cryptocurrencies.
These services include registration, trading, clearing and settlement.
While China has banned banks from serving cryptocurrency institutions, investors and merchants are not prohibited from falling into the category of cryptocurrencies.
Cryptocurrency traders in China only need to find a way to conduct their cryptocurrency activities without using banks, which is possible through P2P channels.
At the same time, China is not the first country to ban financial institutions from serving cryptocurrency trading platforms and related companies.
Earlier this year, the Central Bank of Nigeria banned banks from facilitating cryptocurrency transactions.
Despite the ban, several reports revealed that trading volume of cryptocurrencies in Nigeria continues to rise, thanks to P2P platforms.