China’s rhetoric on cryptocurrencies undoubtedly sets the tone for the whole crypto market. Beijing’s directives on domestic crypto exchanges and firms serve as market catalysts that have induced instant changes in bitcoin and other altcoins over the last 6 years. The last crackdown of China’s authorities on the crypto industry is to blame for a slump in bitcoin’s value to nearly $29,000.
The flagship cryptocurrency was trading at that level in January 2021. Back then, crypto fans and analysts were painting a rosy picture of the crypto market. However, China brutally intruded into bitcoin’s dazzling rally. A few months later, negative news from China sent shock waves across the market of digital assets. On June 21, the People’s Bank of China issued an order to ban large domestic banks and Alipay, the most widely used third-party online payment system, from processing transactions with any cryptocurrency. The decision knocked down the crypto market. Nevertheless, the worst was yet to come as the ruling Communist party escalated its crackdown on the crypto industry. China’s provinces one by one demanded that mining firms should terminate their business. The new directive has come into force in four provinces, including Sichuan where China’s most powerful mining farms were situated. The ban on cryptocurrency mining squeezed a lot of companies out of the country.
Beijing has been implementing its policy to tighten the government control over cryptocurrencies. Chinese Vice Premier Liu He unveiled the official tough stance on mining and trading cryptocurrencies. Shortly after, government news agency Xinhua said it is necessary to “clamp down on bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field.” Such decisive measures from China’s authorities left an imprint on the most popular digital currency. In turn, Chinese largest bitcoin holders rushed to sell their digital tokens, predicting a protracted bearish trend.
