Bitcoin tumbles below $39,000 after China issues warning

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 plunged below $39,000 for the first time in more than three months Wednesday after China said cryptocurrencies would not be allowed in transactions and warned investors against speculative trading in them.

The comments sent the unit diving more than 10 percent and dealt it another blow soon after being battered by comments from tycoon Elon Musk and his Tesla car company.

And in a statement, three state-backed industry associations -- the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China -- said "cryptocurrency prices have skyrocketed and plummeted, and cryptocurrency trading speculation activities have rebounded".

The notice warned consumers against wild speculation, adding that the "losses caused by investment transactions are borne by the consumers themselves", since Chinese law offers no protection to them. 

Bitcoin tumbled Wednesday from $45,600 to $38,570, its lowest since early February, and well off the record high of $64,870 seen as recently as last month. Analysts have warned it could go down as far as $30,000.

- 'Here to stay' -

Bitcoin has had a torrid few days. It took a heavy hit at the start of the week after Musk appeared to suggest Tesla was planning to sell its huge holdings of the unit. And that came days after the electric car giant said it would halt using it in transactions because of environmental concerns.

However, some Chinese enthusiasts remained unfazed.

China is in the midst of a wide-ranging regulatory crackdown on its fintech sector, whose biggest players -- including Alibaba and Tencent -- have been hit with big fines after being found guilty of monopolistic practices.

Consumers already widely use mobile and online payments, but the digital yuan could allow the central bank -- rather than the big tech giants -- greater data and control over payments.

lxc/apj/dan

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