Bitcoin, Ethereum and Coinbase in freefall after China bans all cryptocurrency

The values of Bitcoin and several other cryptocurrencies have plummeted after the Chinese government moved to ban their use.

Bitcoin, and similar virtual currencies such as Ethereum, Cardano and Dogecoin, exist purely as software. There’s no Bitcoin banknote, just a sting of code stored in the user’s digital “wallet”.

Prices of the various cryptocurrencies have been soaring over the past few years but while one Bitcoin was worth over £42,000 in May, it’s now valued at a little over half of that.

Tesla boss Elon Musk went some way towards popping the Bitcoin bubble last week when he announced that the company would no longer accept the virtual currency for vehicle purchases, citing the “rapidly increasing use of fossil fuels for bitcoin mining.”

Bitcoins are created by “miners” who use they computers to verify Bitcoin transactions worldwide – using immense amounts of computing power which in turn uses a lot of electricity.

The price of Bitcoin dropped about 5% in the first minutes after Musk’s announcement.

The SpaceX supremo also took part in a Saturday Night Live show over the weekend where dogecoin was described as just “a hustle.”

Today’s announcement from China means that financial institutions will no longer be permitted to trade in the digital currencies.

The Chinese government’s main concern appears to be a potential crash in virtual currency prices after a period of intense speculation.

“Recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order,” an official statement read.

In the past day Bitcoin’s plummeted by almost 22% while rivals Ethereum and Dogecoin lost 40% and 45% respectively.

Ipek Ozkardeskaya, a senior analyst at online trading platform Swissquote told Yahoo news: “From a technical standpoint, the indicators are flashing red."

Shares in Coinbase, the main US crypto exchange, tumbled over 10% at the start of trading.

Edward Moya, from Foreign exchange company Oanda Corporation, told The Guardian: "Coinbase will go down as one of the worst direct listings ever.

"Coinbase is getting crushed as the crypto markets collapse. The global crypto market is down over 25% today alone and this crash will not bode well for attracting new customers.

"Coinbase wants new crypto traders, but many will be afraid that this Bitcoin crash could end up just like the one in 2017."

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