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The rapid and deep regression of virtual currencies is throwing the cryptocurrency boom to the test.
In the last week, the value of more than 7,000 tokens monitored by CoinGecko has dropped by more than $600 billion to $1.9 trillion.
Bitcoin, the most well-known cryptocurrency, was trading nearly 21% lower than a day earlier at $34,693.1 as of 7pm IST Wednesday after Chinese regulators declared a crackdown on cryptocurrency payments. Bitcoin fell below $40,000 for the first time since February, and other major cryptocurrencies experienced market volatility as a result of the price drop.
Another popular cryptocurrency, Ethereum, was down 25% at $2,453.15 and Binance Coin, or BNB, was down nearly by 31% at $353.12.
Financial institutions in China will no longer be able to fund crypto-related transactions as a result of the news. Customers are effectively barred from receiving all cryptocurrency services, including trading, from banks, payment networks, and lending institutions. Individuals who own bitcoin or other cryptocurrencies are unaffected by the latest regulations.
Several factors are at stake, ranging from one time promoter Elon Musk’s criticism of Bitcoin’s energy usage’s environmental effects to the possibility of a regulatory crackdown on what has been dubbed the “Wild West of investing.” The returns from digital tokens have been so large that some traders may have been taking money.