FX.co ★ Bitcoin crashes after China banned crypto transactions

Bitcoin crashed yesterday, finally losing all the gains it had when Tesla announced its investments last February. It dropped by as much as 40%, from $ 64,770 to $ 39,500. One of the main reasons is Tesla CEO Elon Musk himself, who last week announced that the company will no longer accept bitcoins as payment. Back then, the cryptocurrency decreased by around 15%.

Then, on Tuesday, the People's Bank of China issued a bill stating that digital tokens will not be recognized as forms of payment. They reasoned the high risks associated with it.

Fiona Cincotta, Senior Financial Markets Analyst at City Index, said the massive swings in Bitcoin highlight the speculative nature of cryptocurrencies. She said this will probably not be the last time that prices will jump.

The reason why Tesla decided to stop its bitcoin transactions is the concern about the massive use of fossil fuel Bitcoin mining and transactions consume. And over the weekend, Musk hinted that Tesla might sell its bitcoins, although he immediately retracted it and said they haven't sold any tokens yet. Unfortunately, it caused anxiety among investors.

DWS CIO David Bianco said Musk's comments are helping Bitcoin become a more serious asset.