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Crypto crash: China ban sees currencies plunge in value by $1 trillion

Business

Almost $US1 trillion ($A1.3 trillion) was wiped from the value of crypto currencies overnight after China acted to effectively ban its institutions from using it.

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There was a recovery on technical grounds that put a floor of $US30,000 ($A38,000) on Bitcoin but at one stage it had lost $US100 billion ($A130 billion) in value. This morning Bitcoin was trading at $A50,000.

Ether lost about 45 per cent of its value. Dogecoin lost about 22 per cent of its value.

The dramatic slump follows several weeks of volatility in crypto currencies, mostly due to comments by billionaire Elon Musk who first supported Bitcoin by allowing it to be traded for his Tesla electric vehicles and also invested heavily in it. Musk also talked up Dogecoin, then referred to it as “a hustle” and stopped Tesla from using Bitcoin because of the amount of energy needed to create the crypto currency.

Last night’s trading saw Bitcoin lose 30 per cent of its value after the People’s Bank of China put out a statement saying crypto currencies had no monetary properties, was not a real currency and should not and cannot be used as a currency in the market.

“Financial institutions, payment institutions and other member units must earnestly strengthen their social responsibilities. They must not use virtual currency to price products and services, underwrite insurance businesses related to virtual currencies or include virtual currencies in the scope of insurance liability and most not directly provide customers with other services,” the bank said.

China has previously raised concerns about crypto currencies and its use in money laundering but it had previously not prevented people from trading in it.

The bank’s statement said that the volatility in crypto-currency prices “seriously violate people’s asset safety” and are disrupting the “normal economic and financial order”.

 

 

 

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