Cryptocurrency Prices In Free Fall As China Continues Harsh Crackdown On Mining And Trading
The cryptocurrency market is in free fall with the prices dropping heavily by 25% last week. Though there are various reasons for this dump, the most recent reason is due to concerns about Chinese making moves to crackdown on crypto mining and trading. This decision has created uncertainty in the crypto markets and affected the prices of digital currencies.
Many other cryptocurrencies were down on Wednesday, in addition to bitcoin. After trading above $3,000 on Tuesday, Ethereum fell below $2,000 per unit before regaining some of its lost ground. Ether was trading at approximately $2,600 on Wednesday afternoon, down about 22%. Dogecoin, the meme-turned-cryptocurrency, has lost more than 24% of its value.
Three government-backed organizations, including the China Banking Association, issued an alert that many interpreted as implying that the country will control cryptocurrencies more strictly.
They cautioned that digital currencies are not “absolute” and “cannot be used as market currency.” According to the joint statement, people’s property and the “natural order of economy and finance” were being jeopardized by the “speculation practices” that have engulfed virtual currencies, which have come amid surging and falling prices.
Bitcoin was already on the decline earlier this month after Tesla (TSLA) CEO Elon Musk expressed concern about the cryptocurrency’s environmental effect. However, a recent statement from a Chinese financial and banking regulators group seems to have stunned cryptocurrency markets even more.
On Tuesday, the agencies said that financial institutions and payment companies should not engage in cryptocurrency transactions or offer cryptocurrency-related services to their customers.
“Prices of cryptocurrency have skyrocketed and plummeted recently, and speculative trading has bounced back. This seriously harms the safety of people’s property and disturbs normal economic and financial orders,” was reported in a statement from regulators controlled by the People’s Bank of China and the China Insurance and Banking Commission.
China’s skepticism towards cryptocurrency dates back several years. Although the country does not outright ban cryptos, regulators deemed bitcoin a fake currency in 2013 and prohibited financial and payment institutions from transacting with it. They cited the possibility of bitcoin being used for money laundering, as well as the need to “maintain financial stability” and “secure the yuan’s status as a fiat currency” at the time.
The alert is potentially dangerous enough for cryptocurrencies in and of itself: China is a massive market, and one that is primarily linked to their use, and any crackdown would likely limit the amount of mining and trading that can take place, as well as the possibility of cryptocurrencies ever breaking into the mainstream.
However, since it is a warning that countries can crackdown on virtual currencies, the consequences are likely to be felt beyond China. Other regulators, like the UK, have indicated that they are looking into their usage and trading more closely, so the Chinese crackdown may be the first of several problems for virtual currencies.
Authorities worldwide have expressed their concerns about the illegal use of cryptocurrencies and the recent actions taken by the Chinese government is not helping matters in the cryptocurrency market. In this period of uncertainty in the markets, you can take your chances with Fanspel- the first blockchain-based fantasy sports platform- where you can play fantasy games to earn additional income.