camila June 22, 2021

HONG KONG (REUTERS, BLOOMBERG) – Bitcoin’s slide toward US$30,000 amid China’s continued cryptocurrency crackdown is stoking fears of a deeper selloff.

Bitcoin fell as low as US$31,333 in London on Monday (June 21), dragging down other cryptocurrencies. It was trading at about US$32,240 as of 9.08am on Tuesday in Hong Kong.

The world’s biggest cryptocurrency has lost about 20 per cent in the last six days alone and was at half its April peak of almost US$65,000. Year to date, it remained 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, Pankaj Balani, chief executive officer of digital asset derivatives exchange Delta Exchange, wrote in an email. But he expects the coin to rebound and challenge US$40,000 in coming weeks.

Some Bitcoin investors were concerned 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$656.5 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 Elon Musk and Tesla cooled on Bitcoin.

China has also been tightening its crackdown on cryptocurrencies.

On Friday, the authorities in the south-west province of Sichuan 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.

“People still react strongly to actions from China that create uncertainty so this is likely to reflect negatively on the Bitcoin price,” said Mr Ruud Feltkamp, chief executive at crypto trading bot Cryptohopper.

“China is rolling its own cryptocurrency and has every incentive to have as little competition as possible… I think we will see miners leaving China and relocate where there is spare or cheap energy.”

Data on mining is scarce. Yet last year,  Bitcoin in China accounted for about 65 per cent of global production, according to data from the University of Cambridge, with Sichuan being 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 regulatory monitoring system targeting key websites and accounts to detect illegal crypto-related transactions.

In 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 that is expected to fetch up to US$15 million (S$20.2 million) can 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.