Official Chinese warnings over the perils of cryptocurrencies have knocked the price of bitcoin to a six-month low, providing another reminder to investors of the shifting regulatory environment, just weeks after President Xi Jinping gave his backing to the potential of blockchain technology, reported the Financial Times.
In European trading on Monday, bitcoin slipped as much as 11% before rebounding to about $7,250. The cryptocurrency has fallen about 15% over the past five days, pushing it down to levels not seen since May.
The slump in the digital currency, notorious for its booms and busts, has been prompted by indications that Beijing is sticking to a tough line on crypto trading.
“People were getting very excited,” said Mati Greenspan, founder of Tel Aviv-based investment research firm Quantum Economics. Hopes grew that China would remove the bitcoin ban imposed two years ago and allow exchanges to operate, which would have led to “huge volumes” for trading in the currency, he said. “They were overly bullish and now China is smacking them down a bit.”