Showing posts with label Bitcoin. Show all posts
Showing posts with label Bitcoin. Show all posts

China Bans all Types of Crypto Currencies Trading and Mining

BEIJING: China has banned all cryptocurrency transactions and vowed to stop illegal crypto mining, delivering the toughest blow yet to the trillion-dollar industry.


Crypto-related transactions will be considered illicit financial activity, including services provided by off-shore exchanges, the People’s Bank of China said on its website on Friday. It added that cryptocurrencies, including Bitcoin and Tether, are not fiat currencies and cannot be circulated.  

It is the harshest step yet that China’s taken against crypto and strikes at the heart of a market that has boomed this year and attracted enthusiasts including billionaire Elon Musk. China has long expressed displeasure with crypto because of its ties to fraud and money laundering, and excessive energy usage. 

Bitcoin slumped in the wake of the announcement, falling 6% to about $41,800 in New York. China’s strict approach is part of the reason why Bitcoin prices collapsed in May and have struggled to regain previous all-time highs above $60,000. 

While there are probably still Chinese onshore speculators, activity has already shifted out of the country over the years amid increasingly stringent regulations, says Clara Medalie, the research lead at the data provider Kaiko.

“News out of China impacts markets because it can shake market sentiment, but the actual effect of another Chinese ban has minimal impact on underlying market structure at this point,” she said.

China is home to a large concentration of the world’s crypto miners, who require massive amounts of power and thus run afoul of the nation’s efforts to curb greenhouse gas emissions.

The country is a dominant player in crypto and as recently as April had a 46% share of the global hash rate, a measure of computing power used in mining and processing, according to the Cambridge Bitcoin Electricity Consumption Index.

Investors should expect a “knee-jerk price reaction as China takes the wind out of Bitcoin’s sails”, said Antoni Trenchev, co-founder of the crypto lender Nexo. “The recent rebound from just below $40,000 has likely run its course for now.”  

Bitcoin and other virtual currencies are back on the defensive after a rebound from July lows. In the United States, regulators are also now issuing strong warnings to the industry that it is in danger of echoing the toxic culture before the 2008 financial crisis.

Earlier this month, the US Securities and Exchange Commission sent a notice to Coinbase Global Inc that it could be sued for offering proposed accounts with high-interest rates.

Vijay Ayyar, Asia Pacific head of the cryptocurrency exchange Luno in Singapore, said that while the Chinese government has made similar statements in the past, it is “a slightly nervous environment for crypto with the recent SEC comments and the overall macro environment with the Evergrande news. So any comments of this nature will cause a selloff in risky assets”.

Why are Prices of Bitcoin and Other Cryptocurrencies Crashing

El Salvador shifted to the first country in the world to adopt bitcoin as legal money on Tuesday, despite considerable internal skepticism and international warnings about consumer hazards. 

Why are prices of Bitcoin and other cryptocurrencies Crashing

Bitcoin prices fell by more than 17%, from more than $52,000 per coin to $42,000, before regaining about half of that loss after El Salvador became the first government to recognize Bitcoin as legal money on Tuesday. However, the deployment hit a snag in the early hours, with El Salvador President Nayib Bukele claiming that the digital wallet used for transactions was not operational.

The selloff on Tuesday is the most major hiccup in the rally that has raised Bitcoin over 75 percent since late July. According to tracker CoinGecko, the overall cryptocurrency market value has dropped by roughly $300 billion in the last 24 hours.


Bitcoin prices today were about $46,757, down 11% from the previous day, indicating a slight rebound for the world's largest cryptocurrency. Meanwhile, other digital currencies followed suit, with ether falling over 11% to $3,471 and dogecoin and Cardano falling 15% and 12% to $0.26 and $2.5, respectively. Stellar, XRP, and Uniswap have dropped by 15-20% in the previous 24 hours.

"Over the weekend, social media platforms were quite wary that a drop may occur following El Salvador's huge day," Edward Moya, senior market analyst at Oanda Corp., wrote in a note, as cited by Bloomberg. Some investors most likely bought in anticipation of the country enacting its Bitcoin law on September. 7 and then went on to "sell the reality, "He stated.

Experts believe bitcoin is still in a bull market as long as the price remains over $43,000.

Billionaire Mike Novogratz, CEO of Galaxy Digital Holdings and a long-time cryptocurrency bull, told Bloomberg that the market for digital currencies had become overheated in the last eight weeks. He claims that individual investor interest has risen due to major institutions coming on board the cryptocurrency bandwagon.


Author David Gerard of "Attack of the 50 Foot Blockchain," "According to the Associated Press, Tuesday's Bitcoin volatility had little to do with El Salvador. "My initial thought was shenanigans since it's always shenanigans," Gerard told the Associated Press in an email.


"Bitcoin doesn't respond to market forces or regulatory pronouncements," Gerard explained. "That kind of pricing trend, where it collapses massively in minutes and then rises again, is generally one of the major guys frying the margin traders." According to Gerard, because Bitcoin is so sparsely traded, it may have been a significant holding making a massive transaction to get cash, putting the market on a wild ride.

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