China’s recognition of crypto transactions as illegal lowered the price of Bitcoin on Friday. However, China did not impose a ban on “owning cryptocurrencies”, which likely prevented further losses. The central bank has warned of criminal investigations into people suspected of buying and trading cryptocurrencies.
China takes its strongest step towards cryptocurrencies
Because if we observe the previous bans, it was the first time that it was claimed to be “illegal”. However, analysts said Beijing fell short in banning ownership and shielding Bitcoin from long-term price pressure amid an ongoing crackdown. The People’s Bank of China said that, according to a translated version of its statement, Bitcoin, Ether and Tether are “illegal and should not and cannot be used as currency in the market.” The PBOC said that cryptocurrencies do not have the same legal basis as fiat currency, as they are issued by non-monetary authorities and use cryptographic technology.
But Oanda’s senior market analyst, Ed Moya, said in a note Friday that the government is not banning the possession of cryptocurrencies, a move that will “hit the whole crypto space”:
Banning crypto holdings would probably send crypto 20% lower.
How did it affect the Bitcoin price?
Bitcoin initially dropped as much as 9% to approach $41,000. However, Bitcoin, Ether and Tether broke out of their intraday lows at noon on Friday. China thus ran a years-long campaign to restore virtual currencies dating back to 2013, when banks banned banks from conducting Bitcoin transactions. In 2017, he ordered local cryptocurrency exchanges to cease operations, forcing people in China to use overseas exchanges. Earlier this year, Beijing blocked financial institutions from offering crypto services and Bitcoin mining. Now China is going even further, targeting individuals, not just businesses, and closing off ways to cross old borders.
On Friday, the PBOC warned that individuals suspected of a range of activities, such as trading cryptocurrencies and providing price information, will face criminal investigation. It also targeted overseas, online virtual cryptocurrency exchanges serving Chinese residents, saying they were doing illegal business. Amid the crackdown, China has voiced concerns about environmental concerns over mining, as well as the use of cryptocurrencies in financial crimes and triggering financial instability. But since China has banned crypto activities, the roots of the project go back to 2014, and from 2017 it is being tested with commercial institutions and working on its own digital yuan.
Why isn’t the latest ban so bad for Bitcoin?
But there was a big sign that investors would eventually put aside China’s latest announcement, TrendSpider chief market analyst Jake Wujastyk told Insider on Friday. “If you look at Bitcoin’s low on September 20 (around $36,900), we haven’t even seen lows that low,” he said on Friday. Bitcoin “should have broken new lows and hasn’t – at least not yet,” Wujastyk said:
Right now (the news) is stimulating the market, but it won’t make a big difference in the long run… China has been crashing a lot of things lately.
President Xi Jinping launches joint welfare campaign
China has been imposing restrictions and rule changes on companies ranging from technology manufacturers to education services providers in recent months. This is part of a campaign to reform business and social practices and prevent what large companies listing securities in the US view as security risks. President Xi Jinping has also launched a “common prosperity” campaign targeting China’s growing wealth inequalities. “To us (China) it looks like a reaction to the Evergrande-related news earlier this week,” the move on Friday, Chris Kline, COO and co-founder of the Bitcoin IRA, told Insider. He was talking about the possibility of China’s second-largest real estate developer defaulting on $309 billion in debt.
“What happened at Evergrande put the state-controlled economy to shame,” said Kline, whose fintech platform allows clients to invest in cryptocurrencies using retirement. I would expect to see more restrictions and regulatory action. Obviously, Bitcoin was the first target,” he said. Overall, the crypto transactions announcement “is not surprising or shocking to us,” he said.
Robert Kiyosaki called out on Twitter:
Famous real estate investor and author of the best-selling book on financial literacy “Rich Dad, Poor Dad,” Robert Kiyosaki took to Twitter to suggest the real reason why China announced another ban on Bitcoin and all other cryptocurrencies: This ban This comes after China began restricting crypto miners earlier this year.
A new Chinese ban has hit the crypto market
The PBOC’s announcement pushed the entire crypto market into the red, prompting Bitcoin to drop to $41,000 and It forced Ethereum to drop below $3,000. This was the second major blow to the crypto market this week – the first came from China, when the second largest residential developer China Evergrande Group failed to pay its shareholders 2 trillion yuan and saw the price.
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