Crypto Wrap: China Ban Slams Bitcoin

A risk-off move in broader financial markets on Monday also weighed on prices.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

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

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.