Bitcoin jumps back after dropping below $30,000 amid criticism from China

Bitcoin has been on a wild ride since January because of alternating views from Elon Musk and criticism from China which made it drop below $30,000 on Tuesday before jumping back.

The coin dropped 12% on Tuesday and was trading at $28,824 in the U.S., a level it hadn’t hit since January. However, Bitcoin jumped back 4.5% on Wednesday and was trading at $33,837 as of 9:38 am in Hong Kong.

The cryptocurrency plunged massively losing more than 50% since its mid-April high of $65,000. To prove the same point, Bitcoin started 2021 trading around $29,000.

The sharp ups and downs of cryptocurrencies in general and Bitcoin specifically, proves that cryptocurrencies are volatile and are not a legal tender.

These talking points are main reasons why China criticized cryptos and helped it unveil its own digital currency, the e-CNY. Although still in trial, the new Chinese digital currency will allow consumers and business to make and receive payments. They will have to download an e-wallet onto their phones and fill it with money from their bank account.

Unlike cryptocurrencies, the digital yuan will be strictly controlled by the central bank, People’s Bank of China (PBOC). This means that investors and traders will not be able to speculate the value of the digital yuan as people do with cryptocurrencies. Additionally, the central bank will make sure the digital yuan’s valuation is the same as paper bills and coins, and that no one produces the digital currency besides the PBOC.

Read more about China's digital currency:

1) Areddy, J. T. (2021, April 5). China Creates Its Own Digital Currency, a First for Major Economy. The Wall Street Journal. https://www.wsj.com/articles/china-creates-its-own-digital-currency-a-first-for-major-economy-11617634118.

2)Bloomberg , N. (2020, September 8). How China Is Closing In on Its Own Digital Currency: QuickTake. Bloomberg.com. https://www.bloomberg.com/news/articles/2020-09-08/how-china-is-closing-in-on-its-own-digital-currency-quicktake.

References:

1) Hajric, V., & Lam, E. (2021, June 22). Bitcoin Bounces Back After Tumbling Below $30,000 Threshold. Bloomberg.com. https://www.bloomberg.com/news/articles/2021-06-22/bitcoin-drops-below-30-000-for-first-time-since-january.