China’s central bank urged banks and payment firms on Monday to crack down further on cryptocurrency trading and mining in China, sending the cryptocurrency market into a tailspin and resulting in the loss of billions of dollars worth of value from the global cryptocurrency markets.
Bitcoin (BTC) was sitting at an all time high of US$63,613.23 on Apr. 13 but was trading at just US$32,321.04 as of Tuesday morning, June 22.
The decrease in value comes after Chinese regulators, in May, again declared cryptocurrency trading and mining a threat to the country’s financial system and inconsistent with the nation’s carbon emissions goals.
According to a statement by the State Council’s Financial Stability and Development Committee, chaired by Vice-Premier Liu He, the government will “crack down on bitcoin mining and trading behavior, and resolutely prevent the transfer of individual risks to the society” reported the South China Morning Post.
China had banned all financial transactions with Bitcoin and other tokens since 2019 but had turned a blind eye towards mining at farms in Inner Mongolia and Sichuan, Xinjiang as well as other mainland locations until now.
Mining farms situated in Sichuan, Xinjiang were shuttered early on June 20. At midnight all Bitcoin and other cryptocurrency mining operations in Sichuan were powered off ending a years long industry. Any miners engaged in mining in the region are suspected to have incurred massive losses.
Prior to this, China was the world’s largest cryptocurrency mining location accounting for approximately 65 percent of all Bitcoin mining on the planet.
Cryptocurrencies were targeted by the Chinese Communist Party (CCP) as early as 2013 when Bitcoin was trading at less than US$1,000.00. The emerging decentralized technology was seen as a direct threat to the financial stranglehold the CCP has on the nation.
Non-government sanctioned cryptocurrencies have always been viewed as a threat to the governing party. Consistent with past actions, Beijing banned all forms of capital-raising by issuing tokens in 2017 as well, forcing many traders at the time to park their assets.
Coincidentally, trading of China’s official government-backed cryptocurrency, the Digital Yuan, was made available to trade on June 22.
According to www.yuanpaygroup.com , “as of June 22, 2021, anyone can trade China’s new Digital Yuan cryptocurrency coin.”
“As of now, YuanPay Group is the only approved and legalized company in China to trade and sell cryptocurrencies.”, reads the website.
China’s actions felt across the markets
China’s crackdown on cryptocurrency trading is reverberating throughout the market, having an effect on practically every digital currency available to trade and mine.
The popular coin, Ethereum (ETH), was down 25 percent over the past 7 days and the meme coin, Dogecoin (DOGE), after reaching an all time high of US$68 cents on May 7, was trading below US$20 cents on the morning of June 22.
The global market cap for all cryptocurrencies currently stands at US$1.29 trillion which realized a decrease in value over the past day of 4.47 percent representing a loss valued in the ten’s of billions. Bitcoin continues to dominate the market however with a 46.94 percent market share, an increase of 1.52 percent overnight, according to coinmarketcap.com.
Despite these incidental losses Bitcoin remains up over 237 percent year-over-year. Similarly, Ethereum is up over 706 percent year-over-year and Dogecoin is up an astounding 8019.51 percent during the same time period, according to Coinsquare a Canadian cryptocurrency exchange.
Cryptocurrencies are considered extremely volatile and it is recommended that investors only invest funds that they are prepared to lose.