Bitcoin tumble slows with help from Elon Musk

Concerns over the environmental impact of bitcoin mining prompted carmaker Telsa to stop using it in transactions

Concerns over the environmental impact of bitcoin mining prompted carmaker Telsa to stop using it in transactions

Bitcoin's value plunged on Wednesday after China signaled a new crackdown on the cryptocurrency, but its losses were cushioned after Tesla head Elon Musk spoke up on Twitter.

The virtual currency fell to almost $30,000 -- less than half the record value it reached last month -- before climbing back over $39,500 around 2000 GMT. It was still above its level at the start of the year.

At its daily low on Wednesday, the unit lost nearly a third of its value compared to the start of the week and more than half compared to its record, reached just a month ago, on April 14, at $64,869.78.

Trading in cryptocurrencies has been banned in China since 2019 to prevent money laundering, as leaders try to stop people from shifting cash overseas. The country had been home to around 90 percent of the global trade in the sector.

The price fluctuations "seriously violate people's asset safety and disrupt normal economic and financial order," said the statement posted to social media by the People's Bank of China.

It reiterated that providing cryptocurrency services to customers and crypto-based financial products was illegal for Chinese financial institutions and payment providers.

Linghao Bao, analyst at Trivium China, said that despite the ban, Chinese investors could still find ways to buy cryptocurrencies through illegal vendors.

Bitcoin had a roller-coaster day on Wednesday, falling from $45,600 to under $40,000, then climbing back before dropping to $30,017 and up again.

- 'Here to stay' -

Bitcoin has had a torrid few days, in good part because of Musk and Tesla.

Then Musk appeared to suggest Tesla was planning to sell its huge holdings of the unit, before clarifying that the company had not sold any bitcoin.

Mining cryptocurrency is a hugely energy-intensive process requiring large amounts of electricity in giant data centers.

"If bitcoin was a country, it would use around the same amount of electricity a year to mine as Switzerland does in total," Deutsche Bank analysts said in a note.

"This has happened before and it happens every year...," said trader and ex-tech industry worker Zeng Jiajun. "Crypto is here to stay."  

-- Bloomberg News contributed to this story --

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Originally published as Bitcoin tumble slows with help from Elon Musk