Ether Drops Below $2K, Bitcoin Wilts as China Tells Banks to Cut Off Crypto Transactions

Bitcoin, ether and other cryptocurrencies are trading lower after the People’s Bank of China (PBOC) called for a stricter crackdown on virtual-currency dealings.

  • Ether, the second-largest cryptocurrency by market value, is changing hands near $1,920 at press time, the lowest level since May 23.
  • The token powering Ethereum’s blockchain is down nearly 15% on the day and appears on track to test the 200-day simple moving average (SMA) support at $1,872.
  • Bitcoin is trading 10% lower near $31,850, extending last week’s 8.7% decline.
  • Other top cryptocurrencies including XRP, cardano and polkadot are nursing losses ranging from 5% to 10%.
  • In an announcement early today, the PBOC said major financial institutions must stop providing trading, clearing and settlement for crypto transactions.
  • While China’s anti-crypto stance is well established, the latest statement comes after consultation with Alipay and major banks including the Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank and Industrial Bank.
  • The central bank asked for prompt discontinuation of payments channels to crypto traders.
  • Alipay, the Agricultural Bank of China and Postal Savings Bank have put out statements saying they will take necessary steps to prohibit virtual currency-related business activities.
  • PBOC’s strongly-worded communique has bolstered concern of a stricter regulatory crackdown. The resulting weakness in cryptocurrencies appears to be weighing over shares of companies holding bitcoin and involved in virtual currency businesses.
  • Per data source TradingView, shares in MSTR are currently down 7%, and those in Tesla, Coinbase, Square are nursing 1.5% to 3.5% losses, even though the S&P 500 is trading 1% higher on the day.
  • Crypto markets tanked last month on the back of environmental concerns related to crypto mining, China’s crackdown, and fears of an early scaling back of stimulus by the U.S. Federal Reserve.
  • China reiterated its crypto ban last month, citing dangers associated with speculative trading. On Friday, the government intensified pressure on cryptocurrency mining by ordering the closure of 26 suspected mining projects in Sichuan.
  • The Fed unexpectedly brought forward the timing of the first interest-rate hike to 2023.
Read more: Agricultural Bank of China Reiterates Ban on Crypto: Report