China’s crack down on cryptocurrencies
Does it matter ?
China’s crack down on crypto currencies, has yet again risen concern about the future of cryptocurrencies , the evidence being the temporal 9% drop in the price of Bitcoin last Friday after the country delivered what would be the “final straw regulation”.
“China FUD” as twitter branded the situation, is definitely shaking tables in the broader crypto market. But to what extent does china’s crackdown on crypto currencies matter? Is this the beginning of the end? or is it just another hurdle on the way to crypto triumph ?
Its been a long time coming
To begin with , china’s recent clampdown on crypto currencies should not come as a surprise, at least if you have been paying attention.
China began this road as early as 2013 with it’s restriction on banks from handling Bitcoin transactions.
The People’s Bank of China (PBOC) in it’s statement pointed out that cryptocurrency is a virtual good that has no legal status and “should” not be used as currency. How could we ever expect things to get easier for crypto in this republic ?
Four years later (2017), China ordered all exchanges operating within the country to cease operations and banned initial coin offerings (ICO).
2021 crowned the peak of the regulatory sweep with a crack down on crypto mining and making all crypto related transactions explicitly illegal in China. This included halting of offshore exchanges from dealing with Chinese citizens.
As we can see, it is only the climax of a regulation bubble that has been brewing for over a decade.
What is at stake ?
China’s regulations presents a comprehensive “China crypto-exit situation” from the market.
It should be noted that China’s contribution to the crypto-currency entire ecosystem is huge .
Firstly, china has been ground for about 47 percent of global crypto currency mining , with USA coming at a distant second.
This means that Chinese miners or mining groups have generated the greatest percentage of issued crypto currencies especially Bitcoin.
It is also reported that China accounts for the greatest percentage of bitcoin holdings and trading activity.
China is indeed a major player in the crypto currency industry whose exit will hurt cryptocurrency’s future , the extent to which is the debate.
What is the impact ???
The highly speculative and news driven cryptocurrency market as expected , naturally reacted with prices falling rapidly. What would you expect , many buys ? NO, obviously, many investors rushed to dump their holdings .
Following the announcement, Bitcoin prices plummeted and it has always been the same reaction since the beginning of the regulatory fiesta in May. The same going for altcoins including Ethereum and Solana.
It is reported that the Friday blow resulted into a reduction in market value of virtual currencies by close to 159 billion.
But to the shock of many , including myself, Bitcoin prices gained some lost ground very quickly, the dips were quiet temporary to say the least .
Prices a side, this regulation will definitely lead to a shift of crypto currencies mining groups to crypto friendly countries.
But this is something that has been underway ever since the China showed major crypto -skepticism in its early summer regulatory moves which sounded the alarm that something worse could be coming.
Is it the end ?
In my very humble opinion the answer is NO.
China is one of the countries that has cracked down on crypto currencies down to the rabbit hole and it is not by surprise.
Crypto represents exactly everything China is not, ranging from decentralization to freedom, crypto could not have found a home in China.
Much as china has been key for crypto survival, crypto is bigger than China and it is extremely difficult to singlehandedly kill crypto currencies as a country . It is as simple as “you ban mining, we are shifting our ridges to the Bahamas”.
It would take a cartel of “relevant” countries to destroy crypto, which is very difficult to realize because some countries are crypto loving.
Crypto continues to get bigger and bigger elsewhere and will enjoy steady market, it will only take some time to offset the huge volume of Chinese investor’s cash ins and exit.
It has been quiet a stressful time for the crypto community , all i am trying to say in this article is that it is not the bloody end. And if it helps , its HODL all the way for me.
Be generous with your claps as i have been with my opinions. Let me know in the comment section if you have something to say about my opinions.
Thanks for stopping by.
