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China’s crypto ban has almost ‘meme-like status’, but has long-term effects


China has stepped up its crackdown on cryptocurrencies after the country’s central bank, securities regulator and the Supreme Court declared all crypto-related transactions illegal on Friday.

Although the world’s second-largest economy has been taking various steps to restrict crypto trading and mining since 2013, the latest crackdown is by far the harshest and most widespread.

As China tightens its capital controls, regulators have become “smarter and more educated,” said Chris Matta, president of crypto fund 3iQ BTCQ.
-5.45%
Digital Assets told MarketWatch in a phone interview. “It’s very difficult to ban crypto.”

China’s recent measures specifically target over-the-counter crypto services, crypto derivatives exchanges and offshore crypto exchanges that have business or operations in the country, according to Matta.

The cryptocurrency market declined after the news with Bitcoin BTCUSD,
-2.91%
More than 9% fall, and ether ETHUSD,
-4.95%
A reduction of more than 12%. Other small currencies such as XRP XRPUSD,
-3.15%,
Cardano ADAUSD,
+ 4.13%,
DOTUSD polka dots,
-4.19%,
And Dogecoin DOGEUSD,
-3.44%
Losses have also been recorded.

However, most analysts expect the sell-offs to be short-lived.

Friday’s trading volume points to buying support for Bitcoin and Ether, digital resources strategist Armando Aguilar of research firm Fundstrat Global Advisors wrote in his notes. It shows that “traders / investors are accustomed to China FUD and similar ‘shock news’, writes Aguilar. FUD is a crypto slang that signifies fear, uncertainty and suspicion.

“Every time this happens [China’s crackdown] As it happens, markets react to price declines, each time the impact is smaller and shorter, ”Ulrik K, executive director of crypto hedge fund ARK36, wrote in a like email. The story “China has banned bitcoin” has gained almost a meme in the bitcoin community. ”

“There is a strong demand for cryptocurrencies worldwide and it is the only part of China,” said Greg King, founder and CEO of the crypto fund Osprey Fund.

However, excluding price effects, China’s recent strike on cryptocurrencies could further change the global distribution of the crypto industry.

Since China began cracking down on crypto mining in May, some Chinese miners have been relocating to places like the United States and Kazakhstan. Crypto exchanges could redouble their efforts to move away from China, industry experts say.

Crypto exchanges from China “could be transferred to other crypto-friendly destinations in Asia Pacific or other destinations, such as the Bahamas,” Fundstratus Aguilar wrote.

According to the latest statement from the People’s Bank of China, workers in mainland China who work for crypto exchanges abroad, or anyone who provides market and technical support for such exchanges, “must be punished by law.”

Crypto Derivatives Exchange FTX announced today that it has moved its headquarters from Hong Kong to the Bahamas.

Asia’s crypto trading volume is currently 5% of global volume. According to Finstratus, Hinkong has the largest market share of crypto exchanges, including BNNS, Hubi and OKX, over Hit Kong, while FTX and Bitmax dominate Hong Kong.



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