The price of Bitcoin has dropped to its lowest level in months, following China’s announcement on Tuesday of new limits on its use. Financial firms and payment providers in China would be unable to offer cryptocurrency facilities, such as transfers, as a result of the move, which also impacts all other cryptocurrencies.
According to Chinese industry bodies the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China, other facilities affected include registering, trading, and settlements.
The groups have cautioned against risky cryptocurrency trade, which they said “disrupts the usual economic and financial order.” The groups have said that cryptocurrency token values have recently “skyrocketed and plummeted.”
Following the story, the price of Bitcoin, the world’s most famous cryptocurrency, dropped below $40,000 for the first time since early February this year.
At the time of publication, it was worth about $40,250, down 10.6 percent in the last 24 hours. The total number of Bitcoins in circulation is estimated to be approximately $755 billion.
However, it does not seem that Bitcoin is the only cryptocurrency that has been impacted. Token prices have fallen around the board in the last day, according to CoinMarketCap numbers.
The second most expensive cryptocurrency, Ethereum, has dropped 15% to about $3,000. Dogecoin is down about 15% as well. Shiba Inu and SafeMoon, two recently famous new tokens, are down approximately 22.7 percent and 20.3 percent, respectively.
The drop in Bitcoin’s price is only the latest in a series of dramatic declines in the cryptocurrency’s price over the last week or so, fueled in part by Elon Musk’s announcements.
Musk revealed on May 12 that his electric car startup, Tesla, would no longer allow Bitcoin as a form of payment due to environmental concerns.
He described the recent trend in energy consumption linked to Bitcoin mining and transactions as “insane.”
China’s latest ban on cryptocurrency is not the first time the country has imposed sanctions on its use; the technology has long been a source of concern for the country.
China shut down domestic cryptocurrency exchanges in 2017, and the People’s Bank of China announced in 2019 that it would also bar access to exchanges operating in other countries.
Burning Crypto Explained As Trillions of Shiba Inu Coins Vanished by Ethereum Co-founder
410 trillion Shiba Inu tokens were burnt by Vitalik Buterin, co-founder of the Ethereum blockchain technology and cryptocurrency.
The anonymous Shiba Inu founder known as Ryoshi had gifted the billionaire Canadian-Russian programmer more than half of all Shiba Inu tokens in nature, in what Coindesk described as a publicity stunt.
Since then, Buterin has made headlines for giving away massive quantities of cryptocurrencies. He contributed more than 50 trillion Shiba Inu tokens to a COVID-19 aid fund in India last week, which was worth about $1 billion at the time.
Buterin has now burned another 410 trillion Shiba Inu coins, worth about $6.5 billion at the time of publishing, effectively excluding them from circulation. Etherscan, which maintains track of Ethereum transfers, can be used to see the trade, which took place on Sunday.
According to Coindesk, Buterin mentioned in a note attached to another transaction that he had agreed to burn 90% of his entire Shiba Inu portfolio and donate the remaining 10% to an unnamed charity.
Shiba Inu is a meme cryptocurrency that bills itself as a Dogecoin rival, despite the fact that it is actually worth a lot less. According to CoinMarketCap, Shiba Inu tokens were worth about $0.000016 each at the time of publishing.
What does it mean to “burn crypto”?
In the world of cryptocurrencies, “burning” a token refers to removing it from circulation on purpose, usually through submitting it to a cryptocurrency wallet where no one else has access.
Burning a significant number of cryptocurrency tokens has the potential to increase the token’s scarcity. As a result, burning can be used to regulate inflation.
It’s analogous to equity repurchasing in conventional finance, where firms buy their own common stock to maximize the scarcity and future value of shares still owned by investors.
Buterin advised other coin creators not to give him any further tokens unless he consented first, and suggested instead approaching a charity. “I don’t want to be a locus of influence of that sort,” he wrote in the note, according to The New Zealand Herald.
The market volatility of cryptocurrency tokens is well-known. After Buterin’s move to the India COVID-Crypto Relief Fund last Wednesday, the price of Shiba Inu plunged.
According to CoinMarketCap, the total value of all Shiba Inu tokens in circulation is about $6.3 billion.
Experts also previously warned Newsweek of the dangers of investing in cryptocurrencies.
Last week, Adrian Zduczyk, co-founder of blockchain research firm YellowBlock and CEO of the crypto educational site The Birb Nest, cautioned of a rise in “over-hyped tokens” and “high return demands.”