On September 24, information appeared on the Internet that the leadership of the People’s Bank of China published new requirements, according to which any activity with cryptocurrencies, except for ownership, will now be officially banned in the country .
Yesterday Bitcoin fell victim to a factor that has been causing it to fall for several years now – negative news from China .
Most interestingly, the announcement itself took place on September 15, but the rapid spread of the news just yesterday caused a chain reaction and a subsequent collapse. Let’s talk about what is happening in more detail.
Note that Bitcoin still looks good on the daily chart. The cryptocurrency is relatively close to its recent peak at $ 52,920, recorded in the first half of September. In addition, the chart also shows a low in the $ 28,805 zone where BTC was in mid-summer.
Why Bitcoin fell
Representatives of the People’s Bank of China said overseas cryptocurrency exchanges should not provide services to local investors on the mainland. In addition, crypto-related activities were again called illegal.
The negative from China had a noticeable impact on the crypto market: the price of Bitcoin dropped sharply to $ 40,675 and now continues to fluctuate in a narrow horizontal channel between 42 and 43 thousand. All altcoins from the top 10 rankings in terms of capitalization also followed the main cryptocurrency down.
Ethereum lost its key support level at $ 3,000 and now cannot gain a foothold above it. Potentially, such a scenario could lead to a more protracted process of accumulation and further growth of the cryptocurrency.
The market’s reaction was sharp, but at the same time, many cryptocurrency lovers noted that the news itself should no longer surprise anyone. According to Cointelegraph , China has been actively campaigning against Bitcoin for several years now, amid the development of its own central bank digital currency (CBDC).
Moreover, the total number of such “bans” of Bitcoin and cryptocurrencies has already reached 19 units. Moreover, the first of them was recorded back in 2009, when the Bitcoin network was just starting to work. Then the Ministry of Culture and the Ministry of Commerce of China banned the exchange of virtual assets for real goods. This means that this kind of news scheme is already about twelve years old.
This suggests that the government is gradually removing “competitors” – alternative assets that could attract the attention of Chinese investors more than the digital yuan . However, the very fact of the prohibition of activities with cryptocurrencies in the PRC should not negatively affect the market too much – this year the country has lost much in its influence on the cryptosphere, since now there are not so many BTC miners here .
Moreover, given the experience of 2017, a major bull run may lie ahead. Recall that then China also “banned Bitcoin”, after which the main cryptocurrency fell in price by more than 30 percent . However, after that, its value began to grow rapidly and after a few months reached a historical maximum at that time in the region of 20 thousand dollars .
In fairness, it is worth mentioning another point of view. The collapse could have occurred due to the expiration of the Deribit cryptocurrency options, that is, the end of their validity. And as we already know, when this happens to derivatives , they must either be extended or sold. In this case, the second scenario followed, which affected the rate of the cryptocurrency. That is, in the end, the release of news from China became only a catalyst for a fall in prices, which could have happened due to something completely different.
We think that the ban of cryptocurrencies in China in itself looks ridiculous, since this has been happening for almost the twentieth time. However, in essence, citizens can still interact with cryptoassets and are actively doing so – including through the use of the so-called OTC market . That is, in fact, the effect of such “bans” is short-term, and after a few days they are forgotten. Perhaps in the future the world will stop paying attention to such things.