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Cryptocurrencies sink as miners take stock of China crackdown

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Cryptocurrencies sink as miners take stock of China crackdown
Prices had tumbled on Friday afternoon as the People's Bank of China said all cryptocurrency-related transactions were illegal. Photo: Avishek Das/SOPA Images/Sipa USA

Major cryptocurrency prices headed lower on Tuesday afternoon in London, losing yesterday's gains as traders took stock of the fallout from Beijing's crackdown on mining. 

Prices had tumbled on Friday afternoon as the People's Bank of China (PBOC) said all cryptocurrency-related transactions were illegal. These had staged a small recovery yesterday as markets took a breather. 

By 12.15pm in London on Tuesday, bitcoin (BTC-USD) had lost 3.9%, to trade at $41,916, edging further away from the key $50,000 point. 

Ethereum (ETH-USD), having broken above the level seen last week before the ban at $3,100, fell 5.8% to $2,911. 

Crypto markets were unsettled on Friday when the PBOC vowed to crack down on illegal activities of cryptocurrency trading and banned overseas exchanges from providing services to mainland investors.

It also said it would stop all companies from facilitating cryptocurrency trading and will strengthen monitoring of risks from such activities.

Read more: Oil prices head above $80 per barrel as fuel crisis beds in

"By prohibiting Chinese citizens from holding accounts in offshore exchanges, the PBOC closed a loophole exploited by investors," said Naeem Aslam, chief market analyst at AvaTrade. "Furthermore, the ban extends to crypto exchanges from hiring resources domestically in China for roles such as marketing and sales, limiting their ability to provide services to Chinese consumers."

Two of the world’s largest Bitcoin exchanges, Binance and Huobi, have halted new registrations for Chinese users and one will retire current accounts, taking actions to comply with Beijing’s latest ban.

Alibaba, an e-commerce giant, also moved to wrap up crypto-related services, saying on Monday that from 8 October its platform will stop sales of cryptocurrency miners and suspend categories for blockchain miners and accessories.

Watch: What are the risks of investing in cryptocurrency?

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