China has caused a quick and significant drop in prices on crypto markets today.
Thanks in part to yesterday’s boost from the news that Twitter has integrated BTC payments, the price of bitcoin had recovered to around the $45,000 mark.
The unpaid debts and the market in crisis. Evergrande puts Chinese people on alert
China’s bad news brought the price back down to $42,000 in less than three hours.
The Asian country’s central bank (PBoC) explicitly wrote on its website that services offering cryptocurrency trading, token issuance and derivatives for virtual currencies are strictly prohibited and that foreign exchanges providing such services to residents of mainland China are also considered illegal financial activities.
In other words, he said that in China, the use of any cryptocurrency exchange service that involves an intermediary is prohibited, even if that intermediary is foreign. Foreign exchanges are widely used by the Chinese to trade cryptocurrencies.
Yesterday, the case of Chinese real estate giant Evergrande shook financial markets and dealt a blow to Chinese markets as it failed to repay its $84 million debt that was due yesterday.
Chinese crypto market participants are probably scared right now and may have started selling cryptocurrencies en masse.
Declines and new mining clampdowns
Among the top 10 cryptocurrencies by market capitalization, bitcoin today is among those losing the least, excluding stablecoins of course, with ETH dropping -7%, BNB and XRP -8%, SOL and DOGE almost -9%.
ADA loses about as much as BTC (about -4%), while DOT -6%.
The PBoC also said that it has improved its systems for monitoring cryptocurrency transactions, which is why the Chinese might be even more scared, as the crackdown on illegal behaviour in China is quite heavy.
A new clampdown on mining has also been initiated, prohibiting local miners from having access to the electricity market. Those who wish to continue mining will have to do so with self-produced energy.
Bitcoin’s hashrate, which had risen to over 170 Ehash/s yesterday, is back to around 130 today, which is in line with previous weeks.
Given the perilous state of China’s financial markets, it is not surprising that the Chinese government is picking on speculators, even if these are citizens investing their savings.