Bitcoin slid below $30,000 on Tuesday, a key support level and its lowest since late January, as China amped up its crackdown that has all but banned transactions in digital currencies in the country.
At last check, Bitcoin was down 8.91% at $29,531, dipping below the long-held support of $30,000 and hitting its lowest level since Jan. 28. Year to date, Bitcoin is now down 3%. Ether was down 10.18% at $1755, while XRP was down more than 21% at 52.76 cents.
The broad-based declines came after the People’s Bank of China told the country’s major financial institutions on Monday to stop facilitating virtual-currency transactions, increasing the negative sentiment in crypto markets.
Specifically, banks are banned from providing products or services such as trading, clearing and settlement for crypto transactions, the PBOC said in a statement. They also have to make sure to identify virtual-currency exchanges' and over-the-counter dealers' capital accounts, the central bank said.
While the PBOC's anti-crypto bias is not new, the latest statement comes after consultation with the Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank, Industrial Bank and Alipay (China) Network Technology on the issue.
That in turn has raised concern that Bitcoin, Ether and other digital currencies will remain a peripheral mode of payment and store of value - not just in China but globally - that cannot be used in a widespread way to buy and sell goods and services, even as countries like El Salvador adopt Bitcoin as legal tender.
The prospect of Bitcoin and other digital currencies not taking over fiat money still hasn't fazed Michael Novogratz, founder and CEO of Galaxy Digital, who told the Qatar Economic Forum on Tuesday that he is still a buyer of Bitcoin and prefers the digital currency to buying gold.
In a livestream last week, Novogratz said the true value of Bitcoin lies mainly in the community it has built.
"The value of Bitcoin isn't the Bitcoin code. It's this social construct. It's valuable because we say it's valuable. It's crazy," Novogratz said, adding that Bitcoin is more valuable because governments are printing money like "toilet paper."