Bitcoin falls to six-month low after China crackdown

LONDON/MADRID • Bitcoin slumped to a six-month low last Friday after China's central bank launched a fresh crackdown on cryptocurrencies, warning of the risks entailed in issuing or trading them.

The world's most-traded cryptocurrency declined as much as 11 per cent to US$6,798, before trimming losses.

The People's Bank of China's (PBOC) Shanghai headquarters said it would tackle growing cases of illegality involving virtual currencies.

It also cautioned investors not to confuse crypto with blockchain technology, the digital ledger that underpins many cryptocurrencies such as bitcoin. The move came a day after regulators in Shenzhen launched a similar campaign, and came as the PBOC prepares to launch its own digital currency.

Chinese President Xi Jinping said last month that the world's second-biggest economy should accelerate the development of blockchain technology.

Bitcoin, known for its wild price swings, soared over 40 per cent in two days after Mr Xi's remarks, with investors betting that Beijing's backing of blockchain and plans for a digital yuan would accelerate the mainstream embrace of cryptocurrencies. But since late last month, bitcoin has slumped by nearly a third.

Mr Jamie Farquhar, portfolio manager at London-based crypto firm NKB Group, said the PBOC statement crystallised a growing sense among crypto investors that China's embrace of blockchain would be unlikely to include cryptocurrencies like bitcoin.

  • 11%

  • Drop in the value of bitcoin, the world's biggest cryptocurrency, to US$6,798 on Friday, its lowest since May.

"It's the realisation that the positivity over Mr Xi's blockchain announcement was exaggerated," he said. "It may not include bitcoin at this point."

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on November 25, 2019, with the headline 'Bitcoin falls to six-month low after China crackdown'. Print Edition | Subscribe