Bitcoin plunges below US$40,000 as Chinese crackdown triggers fresh selloff

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Bitcoin’s value fell below US$40,000 for the first time since early February as a selloff in cryptocurrency markets showed signs of accelerating.

In early trading in London on Wednesday, Bitcoin was down 12.4% over the last 24 hours at US$39,477, giving it a market cap of just under US$739bn.

READ: Bitcoin tumbles to three-month low amid rumours of Tesla crypto selloff

The latest slide appears to have been triggered by news that Chinese regulators have stepped up efforts to restrict the use of digital currencies, with the People’s Bank of China saying in a post on social media that financial institutions and payment providers should not accept crypto as a payment method or offer services related to digital currencies.

The bank’s intervention may be related to efforts by the Chinese government to launch its own central bank-backed digital currency, known as the Digital Yuan, which is due to enter the market at some point this year.

The possible crackdown in China also piles more pressure on Bitcoin after comments from Tesla Inc (NASDAQ:TSLA) boss Elon Musk over the weekend triggered a price plunge as traders fretted that the electric car maker could sell off all or part of its large Bitcoin stash.

Fears that Tesla could be planning a possible sale of its Bitcoin holdings follow a decision by Musk last week to suspend the company accepting the crypto as payment for its cars amid concerns about the environmental impact of the Bitcoin mining process, which uses large amounts of electricity partially generated from non-renewable sources.

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