The bloodbath which has seen bitcoin drop 37% in value in just two weeks is spreading to other cryptocurrencies.
Bitcoin has seen a calamitous drop in price since the record high of (AUD) $81,961.56 on April 15 this year.
At 8am AEST today it was selling for $49,327.95.
The drop comes after Elon Musk announced Tesla would cease accepting bitcoin as payment for vehicles and other tech products due to environmental concerns.
A renewed crackdown on crypto by China has also sent jitters through the market.
China’s powerful State Council issued a statement late on Friday saying more regulation was needed to protect China’s financial system from crypto trading and mining.
The price of bitcoin dropped 9.7% on the news, giving back gains made on Friday after a steep plunge on Thursday.
Ethereum gave up $388 within two hours of the State Council announcement, losing 15.5% over 24 hours.
The sell-off has spread from bitcoin to other cryptos.
Ethereum has now dropped from a high of $5610.16 on May 13 to $3050.54.
XRP has also been hit hard, plunging from $2.11 on May 18 to $1.19.
Dogecoin has dropped from $0.937640 on May 8 to $0.442022.
Stellar has fallen from $1.02 on May 16 to $0.523977.
China crackdown on crypto
In a statement the State Council 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.”
“We should be more alert and look for potential risks.”
The State Council is an administrative body in which cabinet-level executive department heads make national policies.
It’s one of the most high-profile warnings against cryptocurrencies issued by China in recent years.
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.
Elon Musk’s environmental concerns
Elon Musk’s about-face on bitcoin came as an epiphany on the environmental impacts of bitcoin mining.
“We are concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” the Tesla CEO said in a statement on May 13.
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.
“Tesla will not be selling any bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy.
“We are also looking at other cryptocurrencies that use (less than 1 per cent) of bitcoin’s energy/transaction.”
Bitcoin mining uses vast amounts of energy to power specialised computers solving complex but useless mathematical problems.
The majority of mining takes place in China.
Some studies suggest bitcoin production uses more electricity than the whole of Argentina, Poland, Norway, or Switzerland. But even the lower estimates are that it results in more carbon emissions than Estonia.
Originally published as Crypto plunges in two-hour bloodbath