Bitcoin, the world’s largest cryptocurrency by market capitalization, slumped on Wednesday by 8.7%. BTC was above the 10-hour moving average and below the 50-day, a sideways signal for market technicians.
The total drop for bitcoin in the past 24 hours was 26.7%, going from a high of $43,602 around 21:15 UTC to as low as $31,926 around 13:15 UTC (9:15 a.m. ET)
Bitcoin has recovered somewhat from that low to $40,084.06 as of 9.30 A.M East African Time.
The cryptocurrency has come under pressure recently following a string of tweets from Tesla chief executive Elon Musk, who investors fear has U-turned in his support for the decentralised coins after announcing the company would no longer accept payment on bitcoin for what he said were environmental reasons.
Earlier this week, Elon Musk was also forced to clarify that Tesla had not sold off any bitcoin, following a confusing exchange on Twitter over the weekend about plans for Tesla’s BTC holdings.
After yesterday’s slump, Elon Musk tweeted that Tesla has “diamond hands”, slang for holding on to a position despite wild price swings.
However, the latest blow came from China. The financial industry regulators said banks and payment firms were not allowed to offer clients any services involving cryptocurrencies and warned of the risks linked to trading crypto assets. While the country already has crypto exchanges and initial coin offerings, consumers can still own crypto assets.
In a statement issued on Wednesday, the regulator said, 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.
“China has played this game before where they have banned crypto and brought it back. There are reports that China is focused on their own digital currency within the government, so it’s possible that this was the motive.” Steve Ehrlich, chief executive officer for financial service firm Voyager Digital.
Ether and Dogecoin Follow Bitcoin
Other cryptocurrencies also plunged on Wednesday. Ether, the digital currency that powers the Ethereum blockchain, was down more than 22% at $2,620.97.
Ether is currently exchanging hands at $2,685.91, a 7.83% slump as of press time.
Dogecoin, the meme-inspired token which has been receiving growing support from Elon Musk, fell 25% to less than 36 cents.