The Dragon Impact: Exploring China’s Influence on the Cryptocurrency Market
In recent years, China has become a major player in the world of cryptocurrency. Its influence on the market has been profound, with the country's policies and actions having a significant impact on the prices of digital assets such as Bitcoin, Ethereum, and others. In this article, we will explore China's role in the cryptocurrency market and how its actions have affected the industry as a whole.
China's interest in cryptocurrency dates back to the early days of Bitcoin. The country's large population and booming economy made it an attractive market for digital assets, and many Chinese investors were quick to see the potential of this new form of money. However, it wasn't until 2013 that the Chinese government began to take notice of Bitcoin and other cryptocurrencies.
At first, China was relatively supportive of the cryptocurrency market. In fact, the country became a major hub for Bitcoin mining, with Chinese companies responsible for producing a significant portion of the world's supply of Bitcoin. However, as the cryptocurrency market began to grow, so too did the Chinese government's concerns about the potential risks and challenges posed by digital assets.
Chinese strict actions against Cryptocurrency till date
In 2017, China took a series of actions that had a profound impact on the cryptocurrency market.
1. The country’s Ban on initial coin offerings (ICOs): Firstly was the ban on ICO, ICO is a popular way for start-ups to raise funds through the issuance of new cryptocurrencies. This move was intended to curb fraud and speculation in the market, but it had a chilling effect on the industry as a whole.
2. The country’s ban on all Crypto exchanges: Secondly, China cracked down on Bitcoin exchanges operating within the country. The government ordered all exchanges to shut down, and many were forced to move their operations overseas. This move had a major impact on the price of Bitcoin, which plummeted in the wake of the crackdown.
Despite these actions, China's interest in cryptocurrency did not wane. In fact, the country and its companies continued to invest heavily in blockchain technology, the underlying technology that powers many cryptocurrencies.
3. China banned Cryptocurrency Mining: More recently, China has once again taken action that has affected the cryptocurrency market. In 2021, the country cracked down on Bitcoin mining, ordering many mining operations to shut down. This move was driven in part by concerns about the environmental impact of Bitcoin mining, but it also had a significant effect on the price of the cryptocurrency.
China’s historic investments in cryptocurrency
While China has been known for its crackdowns on the cryptocurrency market, the country has also made historic investments in blockchain technology, the underlying technology that powers many cryptocurrencies.
In fact, China is one of the largest investors in blockchain technology, with the government providing significant funding for research and development. Many Chinese companies have also invested in blockchain-based applications and projects, and the country is home to some of the world's largest blockchain-based startups. For example, the Chinese tech giant Tencent has invested in several blockchain startups, including the popular cryptocurrency exchange Binance. Other Chinese companies, such as Huobi, OKCoin, and Bitmain, are also major players in the cryptocurrency industry.
In 2019, China's President Xi Jinping announced his support for blockchain technology, calling it a "core technology" that the country should prioritize. This sparked a surge of interest in blockchain and cryptocurrency in China. In the same year, the Chinese government launched a new national blockchain initiative, with plans to invest more than $2 billion in blockchain development over the next few years. The initiative was aimed at promoting the adoption and development of blockchain technology in a range of industries, including finance, healthcare, and supply chain management.
In 2020, China's central bank announced that it was developing its own digital currency, known as the Digital Currency Electronic Payment (DCEP). The DCEP was aimed at providing a more secure and efficient way for consumers to make digital payments, and is seen as a potential rival to other cryptocurrencies like Bitcoin.
In July 2021, China's central bank announced that it had completed the development of the DCEP and was conducting pilot tests of the digital currency in several cities. The tests were aimed at testing the performance and security of the digital currency, as well as its potential for widespread adoption.
Then recently in February, 2023, the People’s Bank of China injected ₴73 billion into its banking system with the aim to support the country’s recovery from economic crises and this could have an indirect impact on the cryptocurrency market as it correlated with Bitcoin price bottom and could be crucial to the resumption of the cryptocurrency bull market with the Asian markets especially China playing a major role as stated by a report from Coingecko recently.
Chinese Cryptocurrencies in the Market and their rise:
There are many Chinese cryptocurrencies in the market, including some of the most well-known projects in the industry. Some of the most popular Chinese cryptocurrencies include NEO, Conflux (CFX), Filecoin (Fil), Ontology, VeChain (Vet), Qtum, Nervous Network (CKB), VeThor Token (VTHO), WIN, IRIS and Bytom and many more.
These projects are focused on a range of different applications, from smart contracts and decentralized finance to supply chain management and internet of things (IoT) solutions.
The Peoples Bank of China’s action to boost their economy has been having an indirect impact on the cryptocurrency market as it has correlated with the growth of the total cryptocurrency market capitalization since the beginning of this year, 2023. This is evidenced in the massive increase in some Chinese alt coins as reported from Coingecko, with CFX, FIL and NEO recently surging to 300%, 162% and 100% in the last one week and since the beginning of 2023 respectively.
So, what does all of these mean for the cryptocurrency market? It's clear that China's actions have had a significant impact on the industry. The country's bans on ICOs and exchanges had a chilling effect on the market; its crackdown on mining has caused major disruptions in the supply of Bitcoin. However, it's important to note that China is not the only player in the cryptocurrency market. While the country's policies and actions have had a significant impact, the market has proven to be resilient in the face of adversity. Despite China's crackdowns, Bitcoin and other cryptocurrencies continue to thrive, with new developments and innovations emerging every day.
In conclusion, China's influence on the cryptocurrency market cannot be ignored. The country's policies and actions have had a significant impact on the industry, and its continued interest in digital assets is sure to shape the future of the market. As the world of cryptocurrency continues to evolve, it will be interesting to see how China's role in the market changes and evolves over time. Will the hypotheses of China propelling the next bull-run be favourable? Only time would tell that as we watch and see even though some indicators are already pointing in this direction
