Bitcoin drops below $ 40,000, after China wake-up call

Bitcoin plunged below the symbolic $ 40,000 mark on Wednesday, a first in more than three months, after a wake-up call in China against cryptocurrencies.

At the start of the afternoon in Beijing (around 6.30 a.m. GMT), the main cryptocurrency was trading at $ 39,600, yielding more than 8%, while it was still worth $ 43,602 at the start of the morning.

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China's turnaround

Cryptocurrencies "

are not real currencies,

" said several benchmark Chinese banking federations on Wednesday, warning against "

speculation

" in a country that is yet preparing its own virtual currency. China was once one of the strongholds of bitcoin, the most widespread of virtual currencies. Beijing however took a radical turn in 2019 by making cryptocurrency payments illegal in the country, accused of being an instrument in the service of "

criminal activities.

".

The Asian country was worried about the speculative risks that cryptocurrencies posed to its financial system as well as to social stability.

On the other hand, bitcoin mining activities and the holding of virtual currency on an individual basis are tolerated.

Read also: Tesla: why Elon Musk turns his back on bitcoin as a means of payment

A breach of the security of property

At a time when interest in virtual currencies abroad is growing, three banking federations on Tuesday called on financial institutions "

not to accept [...] or use cryptocurrencies

" as a means of payment.

"

Recently, the prices of virtual currencies have soared and then collapsed

" abroad, while speculative activities "

have jumped

", they noted in a joint statement.

This "

seriously undermines the security of people's property and disrupts the global economic order

," criticized the National Internet Finance Federation, the China Banking Federation and the Payment and Compensation Federation.

China creates its own virtual currency

If China bans cryptocurrency transactions, it is nevertheless accelerating preparations to launch its own virtual currency, which will be issued and supervised by the central bank. Chinese digital currency, the future means of electronic payment on smartphones to replace coins and banknotes, could make its debut in 2022 during the Beijing Winter Olympics.