Bitcoin falls below $40,000 as UAE issues scam alert over DubaiCoin

·3 min read
YICHANG, CHINA - APRIL 14, 2021 - A view of commemorative bitcoin coins, Yichang, Hubei Province, China, April 14, 2021. The cryptocurrency exchange Coinbase is about to go public. (Photo credit should read Costfoto/Barcroft Media via Getty Images)
Blockchain-based tokens suffered several price dives last week in response to talk of a crackdown in China and tweets by Musk. Photo: Costfoto/Barcroft Media via Getty Images

Major cryptocurrencies plunged into the red on Friday as the crypto market continues its volatility since last week's massive sell-off. 

The fall comes after Dubai issued a scam warning to investors, after a cryptocurrency called DubaiCoin caused a stir after claiming it was "the official digital currency of Dubai."

The crypto surged 1000% in the last 24 hours, after claiming it was powered by a blockchain developed in the region called ArabianChain.

Both Dubai's government and ArabianChain have denied any involvement, and the government debunked the claims, saying DubaiCoin was "never approved" calling it an elaborate "phishing scam." 

A fake press release, which has now been unpublished, was issued in the name of Arabian Chain Technology, which is considered to be a legit blockchain company based in Dubai.

Major listing platforms, including CoinMarketCap have since removed the crypto from their pages.

Bitcoin (BTC-USD) fell below $40,000 (£28,195), falling as much as 11% to $35,522 on Friday afternoon. 

Ethereum (ETH-USD) — the world's second most popular crypto — crashed over 12% to $2.473, while dogecoin (DOGE) slumped 9.8% to $0.31 during the session.

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Meanwhile, influential fund manager Cathie Wood — the founder of Ark Investment Management — also added more pressure after she blamed the crypto crash on the "ESG movement."

Speaking to Coindesk’s Consensus 2021 conference, Wood said ESG (environmental, social and governance) concerns over Bitcoin's energy use, exacerbated by Tesla (TSLA) boss Elon Musk, had put a lot of institutional buying "on pause."

Despite that, Wood provided a message of reassurance, saying the top cryptocurrency, bitcoin, is "already on its way and it’ll be impossible to shut it down."

The environmental impact of cryptos has been a source of much concern lately and North American bitcoin miners are working to bring transparency to their energy consumption, through the Bitcoin Mining Council. 

Prior to that, Musk sparked a sell-off after saying the electric carmaker was abandoning plans to accept bitcoin as payment due to environmental concerns.

Chart: Yahoo Finance
Chart: Yahoo Finance

On Thursday, Iran announced it was banning the energy-consuming mining of cryptocurrencies after some of its cities experienced blackouts. This was possibly due to a drought that had affected hydro-electric power generation but cryptocurrency was draining more than 2GW from its grid each day, the country said.

"Bitcoin's energy consumption, and in particular, the percentage of power coming from renewable energies, has been the source of a lot of fear, uncertainty, and doubt lately, so seeing mining companies volunteering to report publicly on this is a good thing, as long as they don't try to force any changes to the protocol without first reaching broad consensus across the entire network," said Mati Greenspan, CEO and founder of Quantumeconomics.io.

Read more: How bad is bitcoin for the environment?

Blockchain-based tokens suffered several price dives last week in response to talk of a crackdown in China and tweets by Musk. 

Last Friday, Chinese vice-premier Liu Hu said China would "severely crack down on illegal securities activities and severely punish illegal financial activities."

The volatility shaved billions off the wider crypto world's value after deep correction hit the market. The global crypto market lost 13.3% over the last 24-hours, according to data provider CoinMarketCap

Watch: What are the risks of investing in cryptocurrency?