As cryptocurrencies reel under the global downturn, Chinese state-run newspaper Economic Daily has warned investors that the price of leading cryptocurrency Bitcoin is “heading to zero”.
The warning came as the cryptocurrency market continued to face a meltdown with Bitcoin hovering around $21,000 per digital coin on Saturday — a substantial drop from its record high of $68,000 in November last year.
“Bitcoin is nothing more than a string of digital codes, and its returns mainly come from buying low and selling high,” the newspaper said.
“In the future, once investors’ confidence collapses or when sovereign countries declare bitcoin illegal, it will return to its original value, which is utterly worthless,” it added, reports South China Morning Post.
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The Chinese government banned Bitcoin mining in July last year.
It has plans to launch its central bank digital currency (CBDC) called the digital Chinese yuan (e-CNY).
The country banned all cryptocurrency transactions last September and barred foreign crypto exchanges from operating within the country in 2018.
The Economic Daily earlier justified China’s ban on cryptocurrency trading by taking examples of the collapse of stablecoins, terraUSD and luna whose value reached zero.
The price of Bitcoin tumbled to a new low of $17,958 this month, before recovering to over $20,000 this week.
According to analysts, Bitcoin may hit a grim $14,000 this year.
The likely bottom range at $14,000 would represent a drop of around 80 per cent for Bitcoin from the $68,000 all-time high.
According to Coindesk, Bitcoin has historically experienced periods of asymptotic price run-ups followed by steep crashes, “typically played out over several months to two years”.
Cryptocurrency watchers refer to these periods as “cycles”.