Bitcoin is facing the biggest one-day slump since last year when China announced curbs on economic news
Bitcoin’s price fell sharply after China announced restrictions on cryptocurrency transactions.
The cryptocurrency fell more than 20% to see a sharp downturn last month.
It fell below $ 40,000 (£ 28,241) and hit its lowest level in more than three months on Wednesday afternoon, and dropped even further to around $ 30,000 (£ 21,180) for a short time.
It later recovered partially but was still trading 10% lower on the day at just over $ 38,000.
The slump should be the biggest one-day drop since March last year and was reflected in other cryptocurrencies like Ethereum and Dogecoin.
At one point, nearly $ 1 trillion was wiped away BitcoinTotal market capitalization.
Bitcoin had risen sharply earlier in the year, hitting a high of just under $ 65,000 (£ 45,891) in April, but has since come under pressure after a series of tweets from Tesla boss Elon Musk.
The electric car maker earlier this year made a big investment in cryptocurrency and said it would start accepting it as payment.
But it was like that last week reversed this position due to the environmental impact of using Bitcoin, which is “broken down” using energy-intensive computer processes.
Now, China has announced a ban on financial institutions and payment companies from offering cryptocurrency-related services – adding to selling pressure. It also warned investors against speculative crypto trading.
Meanwhile, JP Morgan analysts said some institutional investors are leaving Bitcoin for gold – a more traditional store of value when other asset classes are volatile.
There comes a time when the broader market is being grasped Concerns about inflation and whether that will mean US interest rates will go higher sooner than previously thought.
Those fears contributed to the London FTSE 100 and New York Dow Jones falling more than 1% on Wednesday after previous volatile trading last week.