July 24, 2021

How China and Elon Musk brought bitcoin down

Bitcoin plunged this Wednesday, May 19, below the symbolic bar of 40,000 dollars, a first in more than three months, after a call to order in China against cryptocurrencies. This Wednesday morning, the main one lost 7%, to 40,230 dollars. Since the beginning of last week, when it was still worth more than $ 55,000, its price has dropped by 30%, AFP explains.

Cryptocurrencies “Are not real currencies”, estimated this Wednesday several benchmark Chinese banking federations, warning against the “Speculation”, in a country that is also preparing its own digital currency.

China was once one of the strongholds of bitcoin, the most widespread of virtual currencies. Beijing however took a radical turn in 2019 by making cryptocurrency payments illegal in the country, accused of being an instrument in the service. “Criminal activities”.

Fluctuations that disrupt “the world economic order”

The Asian country was worried about the speculative risks that cryptocurrencies posed to its financial system as well as to social stability. On the other hand, bitcoin mining activities and the holding of virtual currency on an individual basis are tolerated.

As interest in virtual currencies abroad grows, three banking federations called financial institutions on Tuesday “Not to accept […] or use cryptocurrencies ” as a means of payment.

“Recently, the prices of virtual currencies have soared and then collapsed” abroad, while speculative activities “Leaped”, they noted in a joint statement.

This “Seriously endangers the security of personal property and disrupts the world economic order”, criticized the National Internet Finance Federation, the China Banking Federation and the Payment and Clearing Federation.

Elon Musk denies bitcoin payments for Tesla vehicles

Interest in cryptocurrencies around the world has surged since the end of 2020. Driven by the involvement of increasingly serious investors, from institutional banks on Wall Street to certain giants of Silicon Valley, the cryptocurrency market has swelled to hit more than $ 2.5 trillion at its peak in mid-May, according to the Coinmarketcap site, which lists nearly 10,000 cryptocurrencies.

But since then, the market has melted by nearly $ 700 billion, and suffers in particular from the about-face of Elon Musk: the boss of the electric vehicle manufacturer Tesla and founder of Paypal, who vehemently defended bitcoin on the networks. social, seems to have changed his mind.

After announcing at the beginning of the year that it had invested part of Tesla’s cash in bitcoin, the very media multibillionaire decided in mid-May to refuse payments in bitcoin for his electric vehicles, citing in particular the environmental risk caused by the mining bitcoin.

EU and US also call for caution

“I don’t know if Elon has any information we don’t have, but the risk of tightening regulation has increased since the Colonial Pipeline pipeline company paid a huge ransom in cryptocurrency.”commented Jeffrey Halley, analyst at financial services provider Oanda.

The Chinese regulator is not alone in worrying about the soaring cryptocurrency market: its counterparts in Europe or the United States have called on investors to be cautious, without prohibiting transactions.

China is also accelerating preparations to launch its own virtual currency, which will be issued and supervised by the central bank. Chinese digital currency, the future means of electronic payment on smartphones to replace coins and banknotes, could make its debut in 2022 during the Beijing Winter Olympics.

With L’Obs


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