The price of bitcoin and other cryptocurrencies plunged today on disputed news out of China and yet more tweets from Elon Musk.

Bitcoin, which had been trading around the $50,000 mark a week ago after hitting a record high of nearly $65,000 April 15, dropped to just below $32,000 at 9:14 a.m. EDT before recovering to over $38,000 later in the day.

The price drop was across the board, with all major cryptocurrencies and “altcoins” except stable coins tied to fiat currency seeing dramatic losses of up to 40%. As of 8:18 p.m. EDT, Ethereum was down 26% in the last 24 hours and 35% over the previous seven days, Binance Coin was down 31% and 40% respectively, Bitcoin Cash was down 34% and 43%, and Litecoin was down 34% and 39%.

The latest trigger came about from disputed reports that China had somehow “banned bitcoin.” CNBC reported Tuesday that “China bans financial, payment institutions from cryptocurrency business” and that the ban was China’s latest crackdown on cryptocurrencies. The report said Chinese institutions have been told that they must not offer any service involving cryptocurrencies, such as registration, trading, clearing and settlement.

One significant thing missed by many media outlets is that the exact same ban was implemented in 2017. As SiliconANGLE reported in September 2017, “the Central Bank of China ruled that all companies dealing in cryptocurrencies, not only bitcoin, will no longer be legal,” and an official had said that “the future in China can not have the so-called virtual currency and the currency between the trading platform.”

Although it was reported in 2017 that the statements were targeted at bitcoin exchanges specifically, the ruling didn’t apply to exchanges alone but all trading in cryptocurrencies and related services by Chinese companies. As Decrypt rightly reported on May 18, the latest message from Chinese government authorities only reiterated the existing ban while warning about cryptocurrency speculation.

The next factor in play is Tesla Inc. and SpaceX Inc. Chief Executive Officer Elon Musk and his prolific use of his Twitter Inc. account. The current plunge in bitcoin’s price started May 12 when Musk announced that Tesla would no longer accept bitcoin as a payment option because of environmental concerns.

The kicker, however, was Musk responding to a tweet from an account called @cryptowhale that stated “bitcoiners are going to slap themselves when they find out Tesla dumped the rest of their bitcoin holdings.” Musk replied “indeed.”

Musk has since stated on Twitter that Tesla has “diamond hands,” a cryptocurrency slang term indicating that it was holding bitcoin and not selling it.

Some other factors may have contributed to the decline in cryptocurrency prices, including leveraged positions being liquidated and concerns over the makeup of reserves backing Tether’s USDT stablecoin. Another potential driver, according to Decrypt, is that traders may have sold off some of their portfolios ahead of the tax reporting season in the U.S. to cover tax payments.

Bitcoin and cryptocurrency markets have been famously volatile and large drops as seen over the last 24 hours are nothing new. Although prices have seemingly stabilized or recovered slightly, it’s open to speculation whether prices will fully recover or whether this is the start of a longer-term bear market.

Photo: Martin Lewison/Wikimedia Commons