On Friday, the Chinese central bank and government announced the banning of Bitcoin and all other cryptocurrencies. Not only exchanges, but also mining are affected. This announcement is a continuation of an old logic of repression of the industry on the part of Beijing.
This is not China’s first attempt. Beijing regularly announces measures against cryptocurrencies in an effort to protect consumers from what the government sees as mere speculative assets threatening Chinese savings. But Friday’s announcements go further. The total ban on all financial transactions involving crypto-currencies was enacted, causing Bitcoin‘s price to fall 6% to €36,116, which was echoed by other crypto-currencies, including Ethereum, which lost more than 9% to $2859.
The announcements sent cryptocurrency-related stocks tumbling on the Hong Kong stock exchange, with one of its subsidiaries, Huobi Tech, losing nearly 30% after the opening bell.
The crackdown is also intensifying. In addition to the ban announced on Friday, Chinese regulators said foreign exchanges were no longer allowed to provide services to cryptocurrency investors.
Despite all these announcements, panic has not taken hold of the market. Indeed, this is not the first time China has cracked down on cryptocurrencies. Already, at the end of August last year, and again before that in May, the Beijing government took measures against crypto-currencies, without causing panic. The declines that followed such announcements quickly underwent readjustments, and this is still what is happening now.
Since Friday, Bitcoin has recovered 2.4% to $44250, while other crypto-currencies are following the same pattern. Ethereum, for example, is up 3% to $3163 and has recovered its losses from Friday. The cryptocurrency market therefore looks solid, and the jolts that have shaken it in recent days are just a short-term reaction to the Chinese announcements. The market is entering a correction and returning to its pre-announcement values, as was the case in May and August.
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