How the market performed after China attacked the use of cryptocurrencies

Bitcoin (BTC) has been introduced into traditional markets over the years and has been the target of regulators around the world completely changing their perception of cryptocurrencies and setting off alarms in governments trying to have total control over the activities and movements of their citizens. That is the case with China, which recently stated that all financial transactions in Bitcoin or any other cryptocurrency are banned within its jurisdiction as regards BTC and other cryptocurrencies worldwide.

The Asian country becomes part of a small list of countries that prohibit transactions in cryptocurrencies, in the opposite direction to that of El Salvador, which introduced BTC as legal tender.

It should be noted that China is one of the largest cryptocurrency markets in the world, so fluctuations there often affect the global price of crypto. Following the central bank’s announcement, BTC derivatives markets went from neutral to bearish, causing Bitcoin price to drop to $ 40,600 on European exchanges in the afternoon before recovering a little later, as previously reported on Cointelegraph

How the market performed after China attacked the use of cryptocurrencies
How the market performed after China attacked the use of cryptocurrencies

This new regulatory measure by the Central Bank of China has had a direct impact on BTC, placing increasingly stringent blockades restricting their citizens’ access to these digital assets and creating massive selling pressure that is causing the price of many digital currencies to fall.

Rules Control

Since 2009, China and Hong Kong have repeatedly banned cryptocurrencies, the first restriction on their use in Chinese banking institutions being in 2013, but experts say the decree issued on September 24 is the mine. It’s detailed and comprehensive.

These measures aimed to provide the services, mining, and even advertising and marketing provided to residents by forex markets on BTC, which impacted the different types of cryptocurrency uses, their market and ecosystem.

It is the first time that the central bank, Beijing’s monetary and financial regulators have come together to explicitly block unofficial digital money transactions.

According to experts in the ecosystem, the real reason for the Bitcoin ban in the region is to promote its own cryptocurrency, the digital yuan, from the central bank (CBDC).

Evergrande catches up with BTC

The cryptocurrency market has been at risk since early last week when the Evergrande situation triggered the liquidation of vulnerable assets.

Bitcoin price collapsed along with falling stock prices as BTC inflows sent to exchanges hit one of their highest highs on September 20.

The listing recorded in the chain during most of the fall was 2,000 BTC, causing the price of the cryptocurrency to drop from $ 42,500 to $ 40,200. However, the price rebounded quickly and returned to $ 42,000 in a matter of minutes.

However, history repeated itself the next day when a sale that drove the price of BTC to a low of $ 39,600 was quickly absorbed by buyers who pushed the price back above $ 42,000.

These contingencies reflected strong support for BTC, which managed to stay above $ 44,000 long before China enacted new regulations on bitcoin and cryptocurrencies in general, causing prices to float again.

To the best of the knowledge of the information, the price of Bitcoin is suffering an 8% drop and a general drop in the overall crypto market.

BTC versus ETH

While companies and sovereign states prefer Bitcoin, financial institutions seem to prefer ETH recommendations to their customers.

In a recent investment note, JP Morgan recommends ETH versus BTC as a store of value for its clients. In the report he referred to the ETH as â ????Information Amazonâ ???? and it has more use cases than BTC.

In addition, he pointed out that while ETH trades in contango, where the futures price is higher than the spot price, the opposite is the case with BTC, which means that when comparing futures with the Price of both assets are not so optimistic about the assets.

The US regulatory strategy

Gary Gensler, the chairman of the United States Securities and Exchange Commission, classified cryptocurrencies as â ???? has designated.wild West– urged Congress to regulate the industry’s supervisory regime.

At a global conference, he pointed out that this asset class is plagued by fraud, fraud and abuse. The congress presented 18 proposals to regulate the blockchain industry. The documents mainly focus on Know Your Customer Policies and Tax Settings.

Despite the fact that the President of the US Securities and Exchange Commission (SEC) has described cryptocurrencies as “the Wild West”, other countries take a different position on these cryptocurrencies, as is the case with Dubai.

Recently, the Dubai World Trade Center announced that it had signed an agreement with its securities and commodities authority to support trading in crypto assets in its free zone.

The acceptance of cryptocurrencies is increasing

Secondly, According to data released by Statista analysts in their research on the use of cryptocurrencies by country, it shows that the world’s highest percentage of BTC adoption at 32% corresponds to Nigeria, which ranks as the first country among the countries that use it / own Bitcoin, followed by Vietnam, which is in second place with 21%, and finally Philippines with 20%.

In addition, the list of countries with the highest acceptance of cryptocurrencies includes analysts such as Turkey, Peru, Switzerland, India, China, the United States, Germany and Japan. The research provided evidence that cryptocurrencies are gaining wider acceptance around the world.

Another news that the crypto space is occupying due to the regulations enacted by China is that the AMC Traders platform, which announced last week that it accepts BTC, ETH, LTC, and BCH, has also agreed to Doge, as to accept a form of payment. Similarly, the Robinhood retail platform is testing a digital wallet feature that allows users to send and receive cryptocurrencies such as BTC, ETH, and Dogecoins.

Cryptodiaspora

It is important to note that the Chinese government’s bans on the use of Bitcoin and other cryptocurrencies caused the exodus of major leading exchanges around the world. – Although cryptocurrency trading in the country was banned in 2017, the new measure aims to move beyond the main exchanges of the crypto ecosystem, and as a result of this new regularization, several companies are starting to emigrate from the country and disrupt commercial relationships with customers from this country.

In response, Huobi Global and Binance, two global exchange leaders popular with Chinese users, blocked new accounts from being registered with customers in mainland China.

Huobi Exchange announced the cessation of both mining activities and some trading services in the Asian country, stating that it would no longer allow new users from mainland China to enforce the new regulations enacted by the government 31 this year will gradually all User accounts in this country closed. However, in statements to Cointelegraph, the exchange stated that it intended to protect all crypto assets from their users in that country before they are permanently closed.

TokenPocket, a crypto wallet service provider, also announced to its customers that it would be operating for customers of. Mainland China, which is at risk of breaking new government-imposed restrictions, and which will actively adopt the regulation. For his part, Sam Bankman-Fried, CEO of the FTX stock exchange, announced that he would settle in the Bahamas and shut down his offices in Hong Kong.

In addition, this restriction also led to the closure of some of the country-based companies in the crypto sector. Sparkpool that second largest Ethereum mining pool worldwide, has decided to cease operations due to the “current action against cryptocurrencies”. The mining company BTC.TOP also ceased its activities in China and joined them with HashCow and Bitmain, the world’s largest manufacturer of mining equipment.

Mining migration

China stepped up its cryptocurrency mining offensive from June this year, and since then the government has been warning major exchanges for buying and selling cryptocurrencies that operations with these digital currencies will not be tolerated in the region.

As mentioned earlier, China is the country that has more computer farms dedicated to Bitcoin mining thanks to its relatively lower energy costs and computer hardware (it accounts for around 25% of BTC).

However, Riot Blockchain, Marathon Digital, and Bit Digital, the U.S.-listed mining companies, fell between 6.3% and 7.5% in pre-market operations. While the Chinese company SOS posted a 6.1% decline and the Coinbase Global cryptocurrency exchange in San Francisco lost 3.4%.

In this sense, the Chinese government also links the mining activity of cryptocurrencies to pollution. However, due to the high energy consumption it consumes, some experts argue that the real reason for banning BTC mining is not to protect the environment, but to promote your own cryptocurrency.

How it affects Bitcoin

It’s not the first time China has tightened its ban on BTC, but there are countries where companies are not stopping selling this digital asset.

For example, in Argentina, two Wall Street-listed technology companies, Globant and Mercado Libre, introduced Bitcoin. In addition, listed companies from abroad such as MicroStrategy, Tesla, Voyager Digital LTD, Galaxy Digital Holdings, which have not stopped the acquisition of BTC despite the decision made by China.

The analysts state that speculation in cryptocurrencies will continue and will continue to fall in the short term, but they expect the price of BTC to rebound above $ 45,000. Unless BTC falls below $ 40,000, the currency will remain strong, according to ecosystem analysis.

According to Sergio Turi, CEO of Inversiones en el Mundo, said that the global economic powers China and the US are opposed to the use of cryptocurrencies, causing major slumps in the ecosystems as they are currently being reflected. In addition, this performance is not impaired in the long term. Even so, Bitcoin could drop to near $ 40,000 in the short term to find support near price and gain upward momentum. Unless we find worse news for the crypto world– reported the CEO of Infobae.

For Freddie Williams, digital asset broker of the English account GlobalBlock, “The market will rebound when the temporary fear subsides, as it did after the crash on Monday.”

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