Bitcoin slips after China central bank vows to crack down on crypto trading

Bitcoin dropped nearly 5 percent Friday, after China’s central banking said that it would clamp down on cryptocurrency trading and ban overseas exchanges from offering services to mainland investors.

Last week, the largest cryptocurrency fell 4.6 percent to $42,874, while smaller coins that trade with bitcoin tumbled as well. Ether dropped over 8 percent, while XRP fell 7 percent.

The People’s Bank of China stated that it will prohibit financial institutions, payment companies, and internet firms from accepting cryptocurrency trading and will increase monitoring of the risks.

Joseph Edwards, Head of Research at Enigma Securities, stated that cryptocurrency markets are in a very fragile state overall. “There’s a certain panic in the air,” he said.

“Crypto continues exist in a gray area of legality in China.”

Premarket trading saw shares in crypto-related and cryptocurrency-related companies slide between 4.1 and 5.1 percent. U.S. listed miners Riot Blockchain and Marathon Digital were also under pressure. SOS, a Chinese-focused cryptocurrency exchange, fell 1.2 percent and Coinbase Global dropped 2.7 percent.

Chinese authorities had earlier this year announced that they would crackdown on cryptocurrency mining. This led to a huge sell-off in bitcoin and other coins.