On Friday, we reported other negative news for cryptocurrencies, which, as usual, are coming from China again. It again emphasized (perhaps most emphatically in this case) its fight against digital assets led by BTC.
In short, suffice it to say:
- The Chinese government bans the mining of cryptocurrencies
- China’s central bank bans trade in cryptocurrencies
- Cryptocurrency transactions themselves should be outlawed
From the point of view of other countries, however, the ban on cryptocurrencies in China is no longer new. The most populous country has surprised the rest of the world with similar steps several times. Cointelegraph portal mentioned such cases as early as 19. Just for the sake of interest, the first reports of a ban on cryptocurrencies in China came at a time when BTC was trading for just over $ 1,000.
The first sign of China’s hostility to decentralized currencies really did not take long. Bitcoiners recorded it as early as 2009, when BTC was only in its infancy in terms of its adoption and price. Even then, the Chinese Ministry of Commerce preventively “banned” the use of “virtual currencies” for trade in goods.
2013 & 2014
In 2013, the Central Bank of China (PBoC) banned Chinese financial institutions from processing BTC transactions and called cryptocurrencies as currencies of no real significance. This news appeared at a time when BTC was growing in value and for the first time had a significant impact on it. As a result, BTC fell below $ 1,000. The largest exchange by volume at that time was the BTCC.
During 2014, several “cryptocurrency bans” appeared – many of which were previously news games and it was difficult to read from them what is an official “verdict” and what is speculation. Several alarming reports banning all cryptocurrency transactions have been replaced by reports that China will close China’s then large FXBTC crypto exchange. According to Cointelegraph, this could have dropped the price of BTC from $ 709 to $ 346.
One of the largest crypto-thefts ever had a connection with China – in 2016, the Hong Kong exchange Bitfinex was hacked, from which more than 119,756 BTC disappeared (that’s why we keep stressing you not to keep unused cryptocurrencies on exchanges unnecessarily). BTC fell more than 10% in response to these news.
Also in 2017, when the previous bull cycle peaked, there were reports from China that could end price growth or slow it down significantly. In September, the Chinese government officially banned exchanges, and the PBoC announced that the Chinese were not allowed to invest in ICOs (initial coin supply). Although these were significantly limited, BTC managed them without major problems. From that moment on, it took him 3 months to strengthen from $ 4,000 to $ 20,000, creating an all-time high that did not surpass until 2021.
In the same year, China closed one of the largest crypto exchanges at the time CTC (by the way, it still works).
The year 2018 began with a huge rise in prices for altcoins, but then came a crushing fall, after which BTC and other cryptocurrencies entered the multi-year period of the bear market. The entire market weakened by more than 80% from the then highs.
Alarm reports from China may again have partially contributed to this. For example, in January, it was speculated that the fall of BTC could have been manipulated from this country, even by manipulating people close to the government.
As early as 2018, the first reports of a ban on cryptocurrency mining appeared at the same time. In mid-February 2018, BTC fell by more than 65% from its maximum, which reached 17 December 2017.
In 2019, BTC was not the target of great media interest, but once in a while an FUD from China reappeared. Again, for example, there was talk of a ban on mining. The PBoC also warned this year that trading in cryptocurrencies would be banned immediately. But nothing like that happened. At least not in practice, because in China cryptocurrencies continued to be traded within a kind of gray zone.
Following the outbreak of the coronavirus pandemic in the Western world, the fall of BTC in March 2020 was again attributed to China. It has been speculated that BTC is sold in bulk by Chinese miners, who at the time generated the largest portion of the world’s hashate BTC.
Subsequently, the Hong Kong government announced a plan to ban retail trade in cryptocurrencies as part of its efforts to combat money laundering. Impact on the price of BTC? From the point of view no significant. BTC beat its ATH and exceeded $ 30,000 before the end of the year.
You will remember the events of 2021 well. It began with the Chinese National Internet Finance Association, the Chinese Banking Association, and the Chinese Payment and Settlement Association issuing a coordinated statement in May 2021 warning against investing in cryptocurrencies.
Subsequently, the PBOC instructed Chinese banks and mobile payment service providers not to provide their services to clients who carry out transactions involving the trading of cryptocurrencies.
Subsequently, the harshest intervention came in the form of a ban on cryptocurrency mining. These regulations have begun to be enforced to a large extent by the autonomous regions of China. Specifically, those in which the most BTC miners were located. As a result, the BTC hashrate (the total computing power expended on its extraction) has dropped by more than 50%. The price of BTC also reacted very negatively, falling from a historical high of over $ 64,000 in a short time to below $ 30,000.
In retrospect, however, the ban on cryptocurrency mining in China is seen as a positive thing. The dominance of Chinese miners has not been healthy (over 65% of the total hashrate) and due to the fact that they are now moving to other regions from Kazakhstan to Canada or the USA, BTC is becoming more decentralized in this direction as well.
As you can see from the examples given, the reports from this Friday are far from being the first and certainly not the last negative news from China that will concern BTC. At the same time, however, it seems that China is gradually running out of ammunition. The market is becoming more immune to such news.