Bitcoin price crashes as China calls for crackdown on crypto mining and trading

The price of bitcoin has plunged after a harsh statement from China. The crypto has been in a sharp drop as the market gets jitters.

The price of bitcoin has crashed again after a new call by Chinese authorities to crack down on mining and trading of the cryptocurrency.

Chinese Vice Premier Liu He summarised a statement from the State Council and said tight regulation was needed to protect China’s financial system.

The statement released late on Friday said it was necessary to “crack down on bitcoin mining and trading behaviour, and resolutely prevent the transmission of individual risks to the social field.”

The price of bitcoin plunged again after a statement by Chinese Vice Premier Liu He. Picture: Ozan KOSE / AFP

“We should be more alert and look for potential risks.”

It’s one of the most high-profile warnings against cryptocurrencies issued by China in recent years.

The State Council is an administrative body in which cabinet-level executive department heads make national policies.

The price of bitcoin plunged on the news, giving back gains made on Friday after Thursday’s deep plunge.

The statement follows a warning against crypto trading by three state-backed industry associations — the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China.

The industry associations said “cryptocurrency prices have skyrocketed and plummeted, and cryptocurrency trading speculation activities have rebounded”.

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

RELATED: Bitcoin, Ethereum, Dogecoin price crash explained

At 9am AEST today bitcoin was selling for $47,133.76.

On April 15 this year it was worth $81,961.56.

US regulators have also pledged to get tough on cryptocurrency trading and warned of a crackdown on “illegal activity broadly including tax evasion”

The Treasury Department said it would require reporting on crypto transfers of more than $10,000, as it already does with cash, CNBC reported.

Cryptocurrency prices in Australia

— bitcoin $47,133.76.

— ethereum $3066.47

— XRP $1.27

— dogecoin $0.456929

Bitcoin price plunge explained

The price of bitcoin was hit hard on May 13 when Tesla boss Elon Musk announced the car company would no longer accept bitcoin as payment for vehicles and other products.

Mr Musk said he and the company had become “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future but this cannot come at the cost of the environment.

“Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to a more sustainable energy.”

The company said it would also look to invest in other types of cryptocurrencies, providing they used less than one per cent of the energy used by bitcoin transactions.

The announcement came after Mr Musk said on February 9 that Tesla would invest $1.95 billion into the cryptocurrency.

Elon Musk, founder of SpaceX, speaks during the Satellite 2020 at the Washington Convention Center on March 9, 2020. Picture: Brendan Smialowski / AFP

A cryptic tweet from Mr Musk on May 17 hinted that Tesla might dump its substantial holdings.

However, he later clarified that Tesla was yet to sell any bitcoin.

His remarks sent the price of bitcoin into a tailspin.

The crypto warning from three state-backed Chinese industry associations also spooked the jittery market.

Mr Musk has faced intense criticism from bitcoin investors since the crypto price crashed.

“The fact that more people aren’t outraged at #ElonMusk for purposefully crashing the cryptos is astonishing. Stop worshipping him,” one Twitter user said.

The post, typical of the backlash the flamboyant executive has caused, included a hashtag combining an unprintable insult with his surname -- and another Musk detractor went as far as to start a cryptocurrency using the hashtag.

Mr Musk, who is most vocal on Twitter, continues to support dogecoin, another virtual currency that was created as a joke but has grown in popularity.

However, his tweets and their influence on prices are drawing increasing attention from analysts.

“You have to prove that his tweets has actually moved the market and it certainly seems that way. It does raise a host of issues,” Todd Cipperman of Cipperman Compliance Services told AFP.