Prices for Bitcoin (BTCUSD) and other major cryptocurrencies plunged Friday morning after Chinese authorities reiterated their tough stance against the asset class. Bitcoin’s price fell by the maximum amount of 10% to $40,983 in roughly three hours, consistent with coinmarketcap.com data. Ethereum (ETHUSD) got trapped in Bitcoin’s slipstream and crashed by 12% to $2,747.34 within the same period. Collectively, cryptocurrency markets fell from a market capitalization of $2 trillion to $1.8 trillion, approximately a tenth loss, during that point .
As of this writing, the markets are recovering. At 16:45 UTC, Bitcoin was changing hands at $42,184.24, and Ethereum was trading at $2,894.59. the entire market capitalization for cryptocurrency markets was $1.89 trillion. Cryptocurrency markets fell in response to commentary from Chinese authorities. Back in May, that they had banned financial institutions and payment services from providing cryptocurrency services to consumers. Today’s notice repeats the ban and adds fresh detail that outlines measures authorities are taking to accentuate their crypto crackdown. The People’s Bank of China posted a Q&A on its website stating that virtual currencies didn’t have status within the country. It also stated that services offering trading, order matching, token issuance, and derivatives for virtual currencies were prohibited.
China had already banned cryptocurrency exchanges in 2017. Today’s notice announced that staff of overseas-headquartered exchanges residing in China would be investigated for “knowingly participating” within the crypto industry. enforcement authorities within the country were asked to “severely” clamp down on crypto-facilitated concealment and gambling. The authorities also moved to crack down on “hype” in crypto prices by censoring information associated with cryptocurrencies and establishing a “joint working mechanism” between different government departments to share information and rapidly respond to threats from virtual currency trading. The mechanism envisages the event of an early warning system that has online monitoring of trading accounts by local governments.
The country’s National Development Reform Council (NDRC) also put out a notice that tightened the vise on its earlier clampdown of cryptocurrency mining within the country. In its notice, the govt agency placed itself in charge of a crackdown on crypto mining. It asked state and native governments to spot mining rigs within their jurisdiction and accelerate their shutdown or departure from the country. Electricity providers were asked to prevent using the national grid to supply services to crypto miners. Mining farms were also barred from electricity trading markets and will get on the hook for increased prices from providers. China’s most up-to-date set of crackdowns against cryptocurrencies continues its charge against the asset class over the past few years. Cryptocurrencies have proved to be a mixed blessing for the country. a number of the most important cryptocurrency exchanges within the world were once based in China, and that they accounted for 90% of all transactions in crypto markets. The country was also a hub for crypto-mining, because of a number of mining-friendly policies and subsidies.
But the govt began tamping down on speculation in monetary markets in 2017, resulting in heightened scrutiny and a subsequent ban on crypto-related activities, like initial coin offerings and cryptocurrency trading. Cryptocurrencies have also been blamed for instigating a capital outflow from the country in 2019. whilst it continues to stymie cryptocurrency trading and mining, China has co-opted the technology behind cryptocurrencies to develop a digital equivalent of its own currency. According to Jason Guthrie, head of digital assets for asset management firm WisdomTree, the newest set of statements may be a “continuation of a (previous) trend.” He told Financial Times: ” … they’re ratcheting up rhetoric before the launch of a digital renminbi.”