Incoming crypto crash? China has banned bitcoin

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China recently re-imposed a ban on Bitcoin and all other cryptocurrencies.

What does this latest cryptocurrency crackdown mean for the market? Is a tidal wave going to crash? Or is it more foam for surfing? Let’s take a look.

What is the latest bitcoin news from China?

China’s central bank recently declared that all transactions involving any type of cryptocurrency are now illegal.

This includes the ever popular Bitcoin. The move resulted in an immediate drop in the price of cryptocurrency, which was later recovered. This type of rollercoaster you can expect in this market!

What was quite interesting was that this news hampered the prices of some DFI (Decentralized Finance) projects. This is probably in exchange for Chinese users which is beyond the control of the companies.

What is China’s relationship with Bitcoin?

I think you can say it’s a love / hate relationship. China has always been one of the most outspoken critics of the cryptocurrency industry.

Still, it was the largest trading market in the country and home to the majority of bitcoin miners. But over the years, the government has repeatedly issued statements calling for an end to cryptocurrency practices.

Digital token trading was banned in 201 digital.

Does this mean a crypto crash is on its way?

Negative news from China often recovers quickly as a result of short-term price declines. Because Bitcoin and other projects are of global interest, it is unlikely that China’s problems will tank the industry.

However, there are some scenarios that could lead to a crypto crash. An interesting part of The Economist offers three conditions that can lead the market to zero:

1. A typical stock market crash

Crypto has a lot of leverage and a massive financial or stock market crash could wipe out cryptocurrency holdings, which is usually the most risky asset for investors.

A general stock market crash can have a domino effect, resulting in a massive impact and a real change in control.

2. The fall of the stable currency

There are several tokens in currencies like the US dollar. These are designed to make transactions easy and fast.

But running these stable coins can cause big market problems. Companies that control them cannot sell enough assets to cover their value. If this happens, it can make it difficult to recover these coins or even make them worthless.

This will cripple some of the big cryptocurrency companies and lead to a crisis of confidence.

3. Direct ‘Cryptocalyps’

In this situation, investors simply stop taking care of the cryptocurrency. Massive change of feeling is not out of the question.

If interest rates rise, you may want to make less risky investments. This means less money in digital currency.

More people leaving these markets means that supply may increase, leading to lower prices. Without a potentially high return, is it worth investing in something risky like Bitcoin?

The content of this article is for informational purposes only. This is not the purpose of any kind of investment advice, no. Bitcoin and other cryptocurrencies are highly speculative and volatile assets. They carry a number of risks, including the total loss of money invested. Readers are responsible for doing their own due diligence and seeking professional advice before making any investment decisions.

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