The People’s Bank of China issued a statement on Tuesday cautioning against the use of cryptocurrencies as a means of payment.

What Happened: Despite the fact that Chinese officials were merely reiterating their previous stance on trading virtual currencies, the news seemed to deepen the existing sentiment of market-wide fear.

Bitcoin dropped under $40,000 for the first time in three months, losing 15% of its value overnight, while Ethereum dropped 23% in the past 24-hours to $2,715.

Large-cap altcoins like Cardano, Polkadot, Dogecoin, and Binance Coin also reported losses in excess of 25% overnight.

Why It Matters: The statement from the PBOC doesn’t have any new regulatory steps, Yu Lingqu, a vice-director at the China Development Institute think-tank in Shenzhen, told Bloomberg.

Furthermore, the notice was conveyed by the central bank but compiled by industry associations rather than government officials, making it “less powerful,” according to Beijing-based law firm DeHeng Law Offices.

“They just want caution,” said Bobby Lee, founder and chief executive officer of crypto storage provider Ballet.

“They feel the market is over-hyped, there’s speculative trading, they’re looking out for the best interests of the people.”

Meanwhile, the uncertainty surrounding the cryptocurrency market turned most crypto analysts bearish in their outlook.

“I was super bullish before Elon’s tweets,” wrote Crypto Quant CEO Ki Young Ju on Twitter. “Can’t blame him, but it seems like a butterfly effect. Until this indicator cools off, I’ll keep my bearish bias.”

This story originally appeared on Benzinga. © 2021 Benzinga.com.

Benzinga does not provide investment advice. All rights reserved.

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