Crypto Wrap: China Ban Slams Bitcoin
A risk-off move in broader financial markets on Monday also weighed on prices.
Cryptocurrency prices plunged this week amid a broader retreat in financial markets and fresh restrictions on crypto trading and mining in China that are essentially a ban.
Bitcoin tumbled from $47,000 last Friday to around $42,000 currently. The world’s most valuable cryptocurrency by market cap briefly fell below $40,000 on Wednesday, its first time below that level since early August.
BTC Prices
Meanwhile, ether dropped from around $3,375 to $2,900 currently, also around the lowest levels since early August.
ETH Prices
Concerns about the health of China’s largest property developer, Evergrande, sent global financial markets reeling on Monday. The S&P 500 fell as much as 2.9% intraday and the risk-off sentiment extended to the blockchain space.
Crypto prices attempted to rebound midweek, but news that China would further restrict cryptocurrency-related activity in the country pushed bitcoin, ether and most other major coins lower again on Friday.
De Facto Crypto Ban
Though China had imposed limitations on cryptocurrencies in the past, the latest announcement was the clearest sign yet that the Chinese government would not allow this new technology to proliferate in the country.
According to translations of the new rules—which were signed by 11 Chinese agencies, including the central bank—trading of virtual currencies and cryptocurrency mining would be illegal.
While not having the world’s most populous country participate in the market is certainly a negative for the crypto space, China’s restrictions aren’t a complete surprise. The Chinese government has been openly skeptical of public blockchains for a long time now, as they may make it more difficult for authorities to keep a tight grip over the financial system.
Moreover, the government has been worried about the impact that cryptocurrency mining has on the environment for some time. China controlled upward of three-quarters of bitcoin mining capacity in 2019 and 46% as recently as April. That number could trend toward zero if the government has its way.
Email Sumit Roy at [email protected] or follow him on Twitter @sumitroy2
