Bitcoin has had a difficult week and is getting eerily close to the $40,000 level. Bitcoin slipped another 5% in the last 24 hours to hover at $41,442. Over the past seven days, bitcoin is down nearly 13%.
The market sell-off can be traced back to developments in China, where the central bank has issued a nationwide ban on bitcoin transactions, blaming fraud, money laundering and energy consumption. China officials are also taking aim at bitcoin mining once again. Meanwhile, fears surrounding China’s debt-laden real estate developer Evergrande also seem to have spilled over into the crypto market.
The People’s Bank of China (PBOC), the country’s central bank, has declared that crypto-related activities are now illegal. It is not uncommon for China to target bitcoin. In the spring, officials targeted bitcoin mining, banning the activity of securing the blockchain and minting new coins in the country. That sent bitcoin miners packing to other jurisdictions and put a dent in the hashrate, or miners’ computing power, at the time. Bitcoin’s hashrate has since recovered.
Now China is painting its ban with a broader brush, added trading, issuing tokens and derivatives such as bitcoin futures to its list of banned activities. International crypto companies that have a presence in China are also banned from operating there. China officials criticized bitcoin speculation, warning that they are watching closer than ever to spot and put an end to crypto activities.
Fight Another Day
Despite the sell-off, bitcoin-market stalwarts are not spooked. Instead, they are reminding one another of every other time that China’s government threw the hammer down on bitcoin and other cryptocurrencies, yet bitcoin has always lived to fight another day.
China has banned bitcoin and cryptocurrencies so many times that I’ve lost count.
— Pomp 🌪 (@APompliano) September 24, 2021
China has been banning bitcoin in one form or another for years, threatening to shutter cryptocurrency exchanges or repeatedly attempting to ban bitcoin mining. Nonetheless, bitcoin’s value continues to balloon over the long term despite China’s interference.
Since 2013, when China attempted to ban the leading cryptocurrency, the bitcoin price is up more than 3,600%. China made similar attempts in 2017 during the ICO craze and nearly every year since, as pointed out by Blockworks.
We created China counter FUD.
A curation of Tweets that show that this isn't a new ban and that in the long-term this will not affect #Bitcoin
— Blockworks (@Blockworks_) September 24, 2021
Investors who sell on China “bans” usually end up bummed… pic.twitter.com/OKlBe9yU9q
— Dan Morehead (@dan_pantera) May 26, 2021
While the bitcoin price sell-off is pressuring altcoins as well, the broader cryptocurrency market cap remains close to $2 trillion.