Bitcoin Price Tumbles as Chinese Notices Roil Market.
Bitcoin (BTCUSD) and other major cryptocurrencies saw their prices plummet early Friday as Chinese officials reaffirmed their harsh stance on the asset class.
According to statistics from coinmarketcap.com, Bitcoin’s price dropped by as much as 10% to $40,983 in only three hours.
In the same time frame, Ethereum (ETHUSD) caught up in Bitcoin’s slipstream and fell by 12% to $2,747.34. During that period, the market value of cryptocurrency markets dropped from $2 trillion to $1.8 trillion, a loss of about 10%.
The markets are rebounding as of this writing.
Bitcoin trading at $42,184.24 at 16:45 UTC, while Ethereum was trading at $2,894.59.
Cryptocurrency markets a total market capitalization of $1.89 trillion.
China Roils Cryptocurrency Markets
Cryptocurrency markets have dropped as a result of Chinese officials’ comments.
They had prohibited financial institutions and payment providers from offering bitcoin to customers back in May.
The notification issued today reiterates the prohibition and provides new information about the steps authorities are planning to ratchet up their crypto crackdown. 1
Virtual currencies do not have legal standing in China, according to a Q&A on the People’s Bank of China’s website.
It further said that services providing virtual currency trading, order matching, token issuance, and derivatives were banned.
In 2017, China imposed a ban on cryptocurrency exchanges.
The staff of overseas-based exchanges based in China investigat for “knowingly engaging” in the crypto sector, according to a notification issued today.
Crypto-facilitated money laundering and gambling request to be “severely” prosecut by the country’s law enforcement agencies.
The authorities also took steps to curb “hype” in cryptocurrency prices by filtering material about cryptocurrencies and establishing a “joint working mechanism” between several government agencies to exchange information and respond quickly to dangers posed by virtual currency trade.
The method envisions the creation of an early warning system that involves local governments monitoring trading accounts online.
The National Development Reform Council (NDRC) of the nation has issued a warning tightening the noose around cryptocurrency mining in the country.
The government agency put itself in charge of a crypto mining crackdown in its notification.
It urged state and municipal governments to identify mining rigs under their jurisdiction and have them shut down or leave the nation as quickly as possible.
Electricity suppliers order to cease providing services to crypto miners via the national grid.
Mining farms also banned from energy trading markets, putting them at risk of higher provider costs. 2
China’s most recent round of anti-cryptocurrency crackdowns extends the country’s war against the asset class over the last several years.
For the nation, cryptocurrencies have proven to be a mixed blessing. China used to be home to some of the world’s largest cryptocurrency exchanges, which accounted for 90% of all bitcoin transactions.
3 Due to a slew of mining-friendly laws and incentives, the nation became a crypto-mining hotspot.
However, in 2017, the government started cracking down on monetary market speculation, resulting in increas scrutiny and a prohibition on crypto-related activity such as initial coin offerings and cryptocurrency trading.
In 2019, cryptocurrency has also been accused of causing a capital exodus from the nation. 4 China has co-opted the technology underlying cryptocurrencies to create a digital version of its own money, even as it continues to stifle bitcoin trade and mining.
The new comments are a “continuation of a (prior) trend,” according to Jason Guthrie, head of digital assets at asset management company WisdomTree.
“They are ramping up rhetoric ahead of the introduction of a digital renminbi,” he told the Financial Times. 5
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