Bitcoin price hit by China’s crypto crackdown
The value of bitcoin and other cryptos has taken a hit, but sellers may be reacting to “old news”.
Bitcoin’s price has taken a hit after China talked up its crackdown against cryptocurrencies, ordering its banks to take a stronger stance against allowing customers to trade the electronic coins.
After bitcoin dived as much as 11 per cent on Monday, the impact continued to be felt early on Tuesday. The price of bitcoin dipped another 4.3 per cent to a two-week low of $US31,170.79 before bouncing to an intraday high of $33,005.72 in typically volatile fashion.
It has so far remained above a five-month low of $US30,016.82 that it reached in June.
Meanwhile the value of ethereum, dogecoin and other cryptos also tumbled.
But while China’s ongoing crackdown on bitcoin has generated a “sell signal” on the cryptocurrency, analysts said the market was reacting to “old news” on the Chinese regulatory front.
China has in recent weeks stepped up its campaign on bitcoin, repeatedly telling banks to stop providing virtual-currency trading systems for their customers. But its ban on banks operating domestic cryptocurrency exchanges was put in place several years ago.
Meanwhile, the longer-term moving average price of bitcoin – often used by investors as an indicator of the long-term trend – continues to slope upward, as it has done since May 5 in 2020.
Adrian Przelozny, chief executive of Australian cryptocurrency exchange, Independent Reserve, said in regard to China’s regulatory enforcement of digital assets, that the market was “overreacting to what is essentially old news”.
“Everyone knows China’s policy towards digital assets is and following through with the enforcement of those policies shouldn’t come as a surprise,” he said.
Moreover, he said the long-term future of the cryptocurrency market “still looks bright”.
El Salvador’s move to accept bitcoin as legal tender and other counties signalling that they may follow are “very bullish signs”, in his view.
“Every time there’s a dip in the market we see a large increase in trading volume as investors rush in to buy the dip,” Mr Przelozny added.
As much as three-quarters of the world’s bitcoin supply has been produced in Chinese bitcoin “mines”, which are technically banned by the Beijing.
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