Analysts warn of Bitcoin 'volatile streak'

Zhu Shenshen
Price fall below US$30,000 for the first time this year before recovering on Wednesday afternoon after China announced ways to crack down on cryptocurrency trading.
Zhu Shenshen

Bitcoin prices fell below US$30,000 on Tuesday night for the first time this year, half of its US$65,000 peak several months ago.

Bitcoin fell more than 10 percent to about US$29,000 but rebounded to US$34,000 on Wednesday afternoon while analysts warned of "volatile streak" risks. 

Before that, China had announced ways to crack down on cryptocurrency trading.

BTC China, China's first cryptocurrency trading platform founded in 2011, said on Wednesday it was quitting the business to "obey regulation rules." Instead, it will turn to blockchain technology research and applications and overseas cryptocurrency trading through investment.

Nasdaq-listed Canaan, which produces mining machines for cryptocurrencies including Bitcoin, dropped 5.85 percent to close at US$7.89, compared with its three-month US$40 peak.

Cannan and other mining machine vendors have deals in overseas markets, such as Kazakhstan, industry officials said.

Earlier this week, China's central bank summoned banks and payment institutions, urging them to crack down harder on cryptocurrency trading.

It urged thorough checks on clients' accounts to identify those involved in cryptocurrency transactions, and promptly cut their payment channels.

Meanwhile, regulators in several provinces have stopped providing electricity for Bitcoin miners. They are regarded as consuming too much power and against China's long term strategy of carbon neutrality.

A notice by a Sichuan Province authority which spread online instructed power companies to stop supplying electricity to all cryptocurrency mines. Sichuan is home to a large number of cryptocurrency mines, which require a colossal amount of energy supplied by the province's cheap and abundant hydropower.

Under a strict regulation policy, miners have to shut down facilities and deal with their assets. Some of them have to sell Bitcoin or other coins to pay their debt, said a Chengdu-based trading platform official, who declined to be identified.

The official was cautiously optimistic about Bitcoin prices as the regulation had been expected.

"For a long period, governments never say to support Bitcoin trading," the official said.

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