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Just as Bitcoin was starting to recover from its steep price decline triggered by Elon Musk’s series of tweets, a new development triggered yet another price drop for BTC. The correction came after China issued a warning on cryptocurrency risks.
The crypto warning was jointly issued by three state-backed financial associations warning the public of the risks due to the volatility of cryptocurrencies, according to the South China Morning Post. The move is aimed at curbing speculative crypto trading and to distance its digital yuan, China’s own central bank digital currency (CBDC) from privately issued digital currencies such as Bitcoin (BTC) and Ether (ETH).
The warning was issued on May 18, 2021, by the China Internet Finance Association, the China Banking Association, and the China Payment and Clearing Association. It was later republished by the People’s Bank of China (PBOC), the country’s central bank, and was also posted on the monetary authority’s official WeChat account.
“Virtual currency is a specific virtual commodity that is not issued by the monetary authority, has no monetary properties such as legal compensation and compulsion, is not a real currency, and should not and cannot be used as currency in the market,” an English translation (via Google Translate) of the warning reads
The warning also added that “financial and payments institutions are not allowed to price products or services with virtual currency,” according to Yahoo Finance.
At the time of writing, BTC’s traded at $39,540.89, based on Coindesk data. The crypto’s price plunged by 12.99 percent in the past 24 hours. At this point, Bitcoin has already declined by around 39 percent from its all-time high of $64,829.14 set in mid-April and is at its lowest since February.
However, experts noted that the warning has no new regulatory implications on the market. “They just want caution,” crypto storage provider CEO Bobby Lee explained. “They feel the market is over-hyped, there’s speculative trading, they’re looking out for the best interests of the people.”
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