China warns bitcoin's value could plummet to zero amid market catastrophe

Beijing has renewed attempts to deter Chinese investors from crypto-related operations in the wake of the global cryptocurrency industry's latest crisis.

As a result of the latest meltdown in the global cryptocurrency industry, China has warned again that the value of bitcoin could drop much further and become worthless. Beijing has also stepped up its efforts to keep Chinese investors away from all crypto-related activities.

In an article published on Wednesday by the Economic Daily, a newspaper directly under the Central Committee of the ruling Chinese Communist Party, it was said that investors should be careful about the risk of bitcoin prices "heading to zero" because of the recent drop of the world's first and most popular cryptocurrency.

The newspaper said, "Bitcoin is just a string of digital codes, and most of its gains come from buying low and selling high." "In the future, bitcoin will return to its original value, which is nothing, when investors lose faith in it or when sovereign countries make it illegal.

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The Economic Daily's latest article comes a month after it used the fall of stablecoins terraUSD and luna as an example of why China shouldn't let people trade cryptocurrencies.

The newspaper said that the lack of rules in Western countries like the US led to a highly leveraged market that is "full of manipulation and pseudo-technology concepts." It said that was a "important external factor" that has made bitcoin's price change a lot.

The new warning from state-run media shows that Beijing is still against all cryptocurrency activities that the government has made illegal, such as trading, fundraising, and mining, even though popular digital tokens have lost more than half of their value on the global market.

Bitcoin started falling again on Wednesday, moving in the same direction as falling stock prices as worries about a global recession grew. It went down by as much as 2.9%, to $20,244. Ether, the second most valuable digital currency in the world, dropped 3.3% to $1,084.80.

Over the weekend, the price of bitcoin fell to a new low for the year of US$17,958.05. On Monday, however, it showed a slight recovery and rose to above US$20,000. Since the beginning of this year, the price of bitcoin has dropped by more than 50%, and the price of ether has dropped by more than 70%.

Western economies have been tightening their monetary policies, which has led to a global sell-off of risky assets like cryptocurrencies. At the same time, a growing number of crypto lending platforms, hedge funds, and stablecoin issuers are now in financial trouble.

In a separate warning, the Financial Regulatory Bureau of Shenzhen said in a statement on Tuesday that people's "property security" is seriously threatened by cryptocurrency trading and speculation, which also leads to crime and upsets financial order. It warned investors not to do anything illegal with their money and not to fall for scams.

The bureau pointed to a notice that China's central bank put out in September of last year. In that notice, China's central bank said that all cryptocurrency transactions were illegal, singled out offshore exchanges that target users in mainland China, and promised to take action against Chinese citizens who sell illegal services.

Still, fans all over the country have been known to find ways to get around the rules and stay active underground. Because of this, the southern province of Guangdong promised last week to do more to stop crypto-related illegal activities.

According to data from web analytics company SimilarWeb, more than 9% of OKX's desktop web traffic on Wednesday came from China. OKX is one of the world's largest cryptocurrency exchanges based on the amount of money it trades.