Bitcoin, Ethereum Struggle to Recover after China’s Crackdown
Major Cryptocurrencies assets, Bitcoin and Ethereum prices plunged strongly after China’s crackdown on mining, trading China’s Financial Stability and Development Committee, chaired by Vice Premier Liu He, singled out bitcoin as the asset it needs to regulate more.
Cryptocurrency market put the market value at $1.61 trillion today, though it had peaked at $2.4 trillion but for the bloodbath after massive sell-offs in the space. The world’s largest and most popular cryptocurrency recently traded down strongly, trading at $38,346 after holding off at $40,000 level.
In all, the total crypto market volume over the last 24 hours settled at $252.83 billion, which makes a 22.41% increase, according to CoinMarketCap. The total volume in DeFi currently printed at $20.74 billion, 8.20% of the total crypto market 24-hour volume. The volume of all stable coins now $210.67 billion, which is 83.33% of the total crypto market 24-hour volume.
At the press time, Bitcoin’s price is currently $38,332.28 with 44.75% dominance, an increase of 1.34% over the day after the market cap lost about 10%. Since hitting an all-time high just under $65,000 in mid-April, bitcoin has fallen rapidly and quickly at about 45%. It’s down about 28% so far this week.
The China’s Financial Stability and Development statement came days after three Chinese industry bodies tightened a ban on banks and payment companies providing crypto-related services, was a sharp escalation of the country’s push to stamp out speculation and fraud in virtual currencies.
Liu is the most senior Chinese official to publicly order a crackdown on bitcoin. Market observers said this is the first time the government has explicitly targeted crypto mining. “It’s hard to read into the real impact of potential action by China, as these statements are being made without specifics,” said John Wu, president of Ava Labs, an open-source platform for financial applications.
“That said, this statement does show the clear risk for bitcoin mining being so reliant on China, and the wills of its government.”
As a result of the new development, analysts said Cryptocurrency exchanges operating in Hong Kong will have to be licensed by the city’s markets regulator and will only be allowed to provide services to professional investors, according to government proposals to be presented later this year.
At the weekend, China’s state broadcaster CCTV warned against “systemic risks” of cryptocurrency trading in a commentary on its website. “Bitcoin is no longer an investment tool to avoid risks. Rather, it’s speculative instrument,” CCTV said, adding the cryptocurrency is a lightly-regulated asset often used in black market trade, money-laundering, arms smuggling, gambling and drug dealings.
Rival cryptocurrency, Ethereum or ETH also came under pressure, trading down at about 15% at $2,339.
“China has tried so often to tackle bitcoin, exchanges, and mining since 2013 that I don’t think this should come as a surprise anymore,” said Ruud Feltkamp, chief executive officer at crypto trading bot Cryptohopper.
“I would be surprised if it is going to have a substantial long-term effect on bitcoin.”
China’s latest campaign against crypto came after the U.S. Treasury Department on Thursday called for new rules that would require large cryptocurrency transfers to be reported to the Internal Revenue Service and the Federal Reserve flagged the risks cryptocurrencies posed to financial stability.
“Nerves remained heightened, and I cannot see liquidity being deeper on Saturdays and Sundays than Monday to Friday, especially after the last week,” said Jeffrey Halley, senior market analyst at OANDA.
“Weekend headline risk could prompt another bout of extended wealth destruction for the weekend warriors.” Bitcoin markets operate 24/7, setting the stage for price swings at unpredictable hours, with retail and day traders driving those moves.
Bitcoin, Ethereum Struggle to Recover after China’s Crackdown
