Bitcoin, the largest cryptocurrency, plummeted 5.1% to $42,527 in New York after the People's Bank of China said that the cryptocurrencies cannot be used as a form of payment. Bitcoin continued its week-long slump that was sparked by Elon Musk's comments on Tesla Inc's holdings of the virtual currency.

This is the lowest level that it has fell since early February. Apart from Bitcoin, Ether lost more than 7%, Internet Computer and Dogecoin also went down.

"This is the latest chapter of China tightening the noose around crypto," Bloomberg quoted Antoni Trenchev, managing partner and co-founder of Nexo in London, a crypto lender, as saying.

Since 2017, China has struck out initial coin offerings and tightened the noose on virtual currency trading within its borders, forcing many exchanges overseas.

Recently, China has taken steps to birth its own digital yuan, aiming to replace cash and assert control over a payments landscape, the Bloomberg reported stated.

Meanwhile, a survey done by the Bank of America fund manager showed that "Long Bitcoin" is the most crowded trade in the world right now.