BTC plummets 10% after China enforces tighter crypto restriction policy.
BTC in free fall
Last Wednesday (19), Bitcoin (BTC), the most traded cryptocurrency in the world, plummeted 10%. The price of the digital asset was up to $ 38,044 per currency, according to Coindesk.
The new quote registered the lowest level of BTC since February. In addition, the value also represents a 36% drop since the currency’s ATH in April ($ 63,347).
With the free-fall of last week, the pioneer and most popular among cryptocurrencies fell 35.89% in the month of May. In addition, the digital asset lost about $ 365 billion in market value. The loss is equivalent to a Walmart or a Visa melted in 20 days.
The price of BTC has been plummeting since the beginning of the month, when Elon Musk used his Twitter to declare that Bitcoin is no longer accepted at Tesla because of the environment.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
However, after a warning from a trio of Chinese tax authorities, it appears to have further shaken the crypto market.
In a new alert issued by Chinese agencies, financial institutions and payment companies should not participate in any transactions related to cryptocurrencies. In addition, they should also not provide services related to digital currencies to their customers.
According to the statement, overseen by the People’s Bank of China and the Banking Insurance Commission, “Cryptocurrency prices have skyrocketed and plummeted recently, and speculative trade has rebounded. This seriously undermines the security of people’s property and disrupts normal economic and financial orders“.
China’s cryptocurrency restriction policy
China’s cold attitude towards cryptocurrencies is not new. Although the country did not completely ban cryptocurrencies, in 2013, China’s regulators went so far as to say that BTC is not a real cryptocurrency and banned financial and payment institutions from trading in the asset.
At the time, they claimed that BTC could be used for money laundering. In addition, it was alleged “the need to maintain financial stability” and “protect the yuan’s status as fiat currency“.
In 2017, chinese authorities issued a second alert, banning initial offers of cryptocurrencies. According to them, this was a way for technology startups to raise money by issuing crypto-tokens to the public.
The crackdown on cryptocurrencies may be justified, in part, by the attempt to implement the digital yuan in China. The country’s authorities are working to implement it in order to keep cash flows under their strict supervision.
What do BTC experts say?
Although the 2013 notice mentioned only Bitcoin by name, some observers consider that the alert applies to all cryptocurrencies, due to Beijing’s aversion to the modality.
According to the state-run China Times newspaper, the last warning issued by local authorities would be a “risk warning by nature“. The vehicle wrote that although it is not a national law or regulation, the alert represents an “industry standard to some extent“.
In any case, it shows that China will not change its mind about crypto anytime soon, worrying traders and investors.
It is worth mentioning that along with the fall of Bitcoin, other major cryptocurrencies also plummeted in the last week. Ethereum plummeted 14%, trading at $ 2,978, a 31% drop from the peak recently reached. Following this momentum, Dogecoin (AKA the meme cryptocurrency) lost 13%. Overall, the market lost nearly $ 1 trillion with the bump of the past week.
Experts say the Chinese ban on the use of cryptocurrencies is clear from the start. Trading and the use of cryptocurrencies are simply prohibited. According to them, this is not “recent” news, since cryptocurrencies are very sensitive to negative news today.
Stock exchanges, such as HASH11, also declined, partly reflecting the hangover caused by crypts. However, analysts at JP Morgan see the migration of resources from cryptoeconomics to gold.
Other opinions claim that investors should not worry in the long run and justify the theory based on the fundamentals of Bitcoin, stating that the computational hash rate of cryptocurrency remains strong, secure and close to its maximum.
BTC price
Currently, BTC is quoted at $ 38,819.06 per currency. The asset holds 42.88% of the market and its cap is $ 727,322,904,064.
