Beyond Cryptocurrencies. Why China is no longer a threat to bitcoin

Experts told if the authorities will continue to tighten control over digital assets and how it may affect their quotes
Beyond Cryptocurrencies. Why China is no longer a threat to bitcoin

Cryptocurrency market remains volatile after new bans in China. On the night of September 30, the bitcoin rate fell below $41 thousand. Then it again approached the mark of $44 thousand. As of 19:55 Moscow time, the main digital coin is trading at $42.9 thousand, for the past 24 hours it has risen by 2%.

The situation in China continues to complicate. It became known that one of the largest manufacturers of mining equipment Bitmain will stop the sale of miners in China, as well as transfer production to other countries due to restrictions imposed by the Chinese authorities.

Last week, the People’s Bank of China imposed a total ban on cryptotransactions. The use of digital assets in the country now equates to illegal financial activity. After the announcement, the bitcoin exchange rate fell by $3,000 per hour. The services provided by cryptocurrency exchanges to Chinese residents were also outlawed.

Against the background of the statements of the country’s authorities, the Chinese online commerce giant Alibaba notified about the termination of sales of cryptocurrency mining equipment from October 8. And crypto exchange Huobi Global reported that from September 24 stopped registration of new users from China, the existing accounts will be disabled until December 31. At the same time, the authorities put the most popular cryptocurrency websites CoinGecko and Coinmarketcap on the block list.

On the one hand, the actions of the Chinese authorities put negative pressure on the entire crypto market, and on the other – everyone is beginning to get used to the fact that China is out of the cryptocurrency area, said the head of the analytical department of AMarkets Artem Deyev. According to him, the current news about bans in the country no longer have much impact on the quotations of cryptocurrencies, although before they could be severely undervalued.

“The PRC will continue to close all opportunities for investors in crypto assets and activities of any companies that are associated with the market. But the impact on the exchange rate from such news is clearly less. And therefore, over time, the market will stop reacting to such events in the PRC, which is simply becoming a territory completely cleared of cryptocurrencies”, Deyev explained.

The Chinese authorities began taking tough action against the crypto market at the end of May. Then Liu He, Vice Premier of the State Council of China, called for stricter regulation of mining and crypto-trading. After that, local provincial authorities began to ban cryptocurrency mining and businesses to leave the country. Against this backdrop, the price of bitcoin fell by a third to $30,000 per day.

Now the market reacts to the existing news background weaker than it could, TradingView Development Director in Russia Vitaly Kirpichev added. He recalled that after the Chinese ban on ICOs in 2017 there were several months of growth and renewal of the historical high, when in December the price of bitcoin for the first time reached $20 thousand.

In China, the unambiguous ban on transactions related to cryptocurrencies will be followed by applied measures of this ban, the director of the cryptocurrency exchange service Alfacash Nikita Soshnikov is sure. According to him, in the near future we should expect reports about the blocking of accounts, closures of offices of companies associated with cryptocurrencies, and investigative measures.

“Most likely, repressive measures will begin against GPU miners who secretly mine altcoins. They will be hunted down, equipment will be taken away and done as publicly as possible to edify others”, the expert added.

According to Soshnikov, the news is unlikely to provoke strong fluctuations on the crypto market because China’s potential on the crypto market is not what it used to be.

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