Cryptocurrencies Bitcoin and Ethereum’s stock plummeted by 8% and 11%. After the People’s Bank of China stated that all crypto-related activities are illegal, the drop was a repercussion.
The Bank also mentioned that service offering trading, order matching, or derivatives for virtual currencies are strictly prohibited, and overseas exchanges are illegal.
The Government of China moved to stamp out digital currency mining, the energy-intensive operation that validates transactions and produces new coins. That led to a sharp slump in bitcoin’s processing power as miners took their equipment offline.
“Short-term sell-off as negative news presses investors to take a conservative approach. As a result of the bans, we previously saw a short-term sell-off and a shift in mining away from China, followed by a swift recovery throughout July and August,” said Constantine Tsavliris, head of research at CryptoComapare.