Falls in cryptocurrency prices steepened on Monday after China’s central bank issued a new statement urging financial institutions to cut all cash flows to the crypto sector.
At the same time, a death cross in Bitcoin’s price chart confirmed investors’ fears that the bear market for the leading cryptocurrency would continue for the next few months.
Bitcoin’s price slipped under $32,000 on Monday 21 June (12:30 UTC+1) for the third time in the last 30 days before rebounding slightly to $32,500.
On the previous two occasions, bitcoin bounced back quickly to more than $40,000. While another comeback can’t be ruled out, investor sentiment remains bearish after last week’s failed attempt to break above the resistance represented by the 200-day simple moving average (SMA).
This technical resistance will probably be even harder to break after the 50-day SMA also went under the 200-day SMA, marking a so-called 'death cross', which usually signals a prolonged bear market.
All of the top cryptocurrencies were trading in the red on Monday, with seven-day losses ranging between 15% and 30%, according to Coinmarketcap.com data.
China increases pressure
The People’s Bank of China (PBOC) issued a statement on Monday calling on the country’s major financial institutions to stop facilitating virtual-currency transactions.
Chinese banks were requested to stop providing account opening and registration for crypto-related activities. They must also not provide products or services such as trading, clearing and settlement for crypto transactions.
Chinese banks will have to identify the accounts of virtual-currency exchanges and over-the-counter dealers and cut off the payment link for transaction funds in a timely manner, PBOC also said.
The Chinese central bank claimed that cryptocurrency trading activities disrupt the normal economic and financial order, breed the risks of illegal cross-border transfer of assets, money laundering and other illegal and criminal activities, and seriously infringe safety of people's property.
Over the weekend, the Chinese authorities also extended their crackdown on cryptocurrency in the south-west province of Sichuan, resulting in more than 90% of the country’s bitcoin miners being shut down.
The Chinese crackdown on cryptocurrencies has been one of the main negative factors affecting the price of digital assets in the last months.