Bitcoin falls towards US$30k amid China's crypto crackdown

HONG KONG • Bitcoin's slide towards US$30,000 amid China's continued cryptocurrency crackdown is stoking fears of a deeper sell-off.

Bitcoin fell as low as US$31,333 in London on Monday, dragging down other cryptocurrencies.

It was trading at about US$32,240 as at 9.08am yesterday in Hong Kong.

The world's biggest cryptocurrency has lost about 20 per cent in the last six days alone and is at half its April peak of almost US$65,000. Year to date, it remains up about 11 per cent.

A conclusive break below US$30,000 would mean a "massive hit" to sentiment and possibly "heavy selling activity" across the cryptocurrency market, Mr Pankaj Balani, chief executive of digital asset derivatives exchange Delta Exchange, wrote in an e-mail.

But he expects the coin to rebound and challenge US$40,000 in the coming weeks.

Some Bitcoin investors were concerned that further losses could be in store due to a chart formation known as a death cross, which occurs when a short-term average trendline crosses below a long-term average trendline.

MicroStrategy said on Monday it had purchased an additional 13,005 bitcoins for about US$489 million (S$658 million) in cash at an average price of about US$37,617.

The news did little to bolster the virtual currency amid concerns that wider institutional adoption is stalling after Mr Elon Musk and Tesla cooled on Bitcoin.

China has also been tightening its crackdown on cryptocurrencies. Last Friday, the authorities in Sichuan province ordered Bitcoin mining projects to close.

Last month, the State Council, China's Cabinet, vowed to clamp down on mining and trading as part of a campaign to control financial risks.

On Monday, China's central bank said it recently summoned some banks and payment firms, including China Construction Bank and Alipay, urging them to crack down harder on cryptocurrency trading.

Data on mining is scarce.

Yet Bitcoin in China accounted last year for about 65 per cent of global production, according to data from the University of Cambridge, with Sichuan its second-biggest producer.

Agricultural Bank of China, China's third-largest lender by assets, said separately it was following the People's Bank of China's guidance and would conduct due diligence on clients to root out illegal activities involving crypto mining and transactions.

Alipay, the ubiquitous payment platform owned by fintech giant Ant Group, said in a separate statement it would set up a regulator monitoring system targeting key websites and accounts to detect illegal crypto-related transactions.

Among other cryptocurrencies, Ether, the token used for the Ethereum blockchain, dropped to a five-week low of US$1,890.

It was last down 14.3 per cent at US$1,922.05.

Also on Monday, auction house Sotheby's announced that a rare pear-shaped diamond expected to fetch up to US$15 million could be bought at an auction next month using cryptocurrencies.

It would be the first time a diamond of such size has been offered for public purchase with cryptocurrency.

REUTERS, BLOOMBERG