Bitcoin steadies in Asia trading after Monday's plunge

Bitcoin stabilised in Asian trading on Tuesday morning a day after a statement from China’s central bank reaffirming the ongoing crackdown on cryptocurrencies in the country sent the world’s largest token to a two-week low.

Bitcoin was last up 3.17% at 32,600, having dropped more than 10% on Monday. Ether, the second-biggest crypto currency, was up 3.54% at 1,950 after hitting a five-week low the day before.

Monday’s sell-off was sparked by an announcement from the Peoples Bank of China saying it had summoned China’s largest banks and payment firms urging them to crack down harder on cryptocurrency trading.

Beijing has sharply ratcheted up its campaign in the past few weeks, since China’s State Council, or cabinet, said last month it would tighten restrictions on bitcoin trading and mining.

However, Tuesday’s price moves suggested Asian traders thought markets overnight had overreacted to the news.

“A Chinese ban on cryptocurrencies isn’t something new. The one that came out yesterday was almost a copy of a previous annoucement, earlier this year,” said Justin d’Anethan, head of exchange sales at crypto exchange operator EQONEX.

“As always, leverage, large participants and fundamental events mean crypto can move dramatically,” he said.

Last month, three industry associations issued a ban on crypto-related financial services, but the bodies are much less powerful than the PBOC.

Market participants said at the time that the earlier ban would be hard to enforce as banks and payment firms would struggle to identify crypto-related payments.

However, following Monday’s PBOC statement, banks including Agricultural Bank of China and Alipay, the ubiquitous payment platform owned by fintech giant Ant Group, said they would step up monitoring to root out crypto transactions.