The world’s biggest cryptocurrency, Bitcoin, fell on Sunday by nearly 50% from its yearly high. Bitcoin dropped to $32,601 following a high of $64,895.22 on April 14th.
The cryptocurrency’s plunge came after reports that China was launching another crackdown on cryptocurrency. Other large cryptocurrencies were also negatively affected by the announcement. Ethereum experienced a loss of almost 40 per cent. Since Sunday, Bitcoin has lost almost 25 per cent of its value following threats of new regulations.
On Friday, China cracked down on Bitcoin mining in an effort to prevent speculative and financial risks. Liu He, Vice Premier of China’s Financial Stability and Development Committee, announced that Bitcoin is the main cryptocurrency requiring greater regulation. “It is necessary to maintain the smooth operation of the stock, debt, and foreign exchange markets, severely crack down on illegal securities activities, and severely punish illegal financial activities,” the statement announced. A “crack down,” is necessary “on Bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field.
Furthermore, Bitcoin has been under pressure following tweets last week by Elon Musk, the Chief Executive Officer of Tesla. Musk announced that he would be reversing Tesla’s acceptance of Bitcoin as a form of payment. Due to this, investors are blaming the tweet for starting the cryptocurrency’s most drastic selloff this of the year. Bitcoin mining has also caused environmental concerns due to the high amount of electricity involved. Although investors do not engage in actual physical mining, the technology burns large quantities of fossil fuels. Musk discussed on Twitter how Bitcoin mining was beginning to use more energy than small countries. ‘Bitcoin hashing (aka mining) energy usage is starting to exceed that of medium-sized countries. Almost impossible for small hashers to succeed without those massive economies of scale,’ said Elon Musk.