Bitcoin, ether, and major altcoins tumble on news that China will completely ban all crypto transactions

• Bitcoin, ether, and major altcoins tumbled Friday after China declared all crypto-related transactions illegal.
• The bank said virtual currencies do not have the same legal standing as fiat currencies.
• "We've also seen this before from China ... but it has not prevented adoption of bitcoin and digital assets from continuing their upward trend," a trader said.

Bitcoin slipped below $42,000 Friday while ether hovered around $2,800 after China's central bank declared all cryptocurrency-related transactions as illegal, its strongest move against the digital asset industry thus far.

Bitcoin was trading at $42,238 as of 2:48 p.m. ET Friday, a slide of around 5.59% in the past 24 hours, while ether was trading at $2,9.7, a fall of 7.65%, according to CoinDesk data.

On Friday, the People's Bank of China said in a statement that virtual currencies "are not legal and should not and cannot be used as currency in the market."

These do not have the same legal standing as fiat currency, the central bank added, since they are issued by non-monetary authorities and use encryption technology.

Activities that the bank considers illegal include buying and selling virtual assets as a central counterparty, as well as providing intermediary or pricing services for crypto transactions.

Also prohibited are token issuance financing, crypto derivatives transactions, and other activities suspected of illegal sale of tokens. The move also bans overseas exchanges from offering services to Chinese residents.

Major altcoins were also sliding lower Friday:

• Ripple: down 6.26% to $0.926393
• Solana: down 8% to $133.06
• Dogecoin: down 7.07% to $0.207360
• Polkadot: down 7.52% to $30.06
• Stellar: down 7.35% to $0.278552

"We've also seen this before from China where news of bans have been reported over the years, but it has not prevented adoption of bitcoin and digital assets from continuing their upward trend," Freddie Williams, trader at digital asset broker GlobalBlock, said in a note Friday.

He downplayed some concerns, saying the market will bounce back similar to the way it did earlier this week after initially selling off on news of the Evergrande debt crisis.