Cryptocurrency Market Tanks on the Same Old China Ban News, But Investors Who Sell Here Will End Up “Bummed”
As China banned crypto yet again, Jeremy Allaire of Circle urged the US to “be on the right side of history; embrace the open internet of value.”
Crypto markets have just made a decent recovery with Bitcoin going above $45k, Ether nearly $3,200, and the total crypto market cap above $2 trillion when China struck again with its same-old repetitive news of cryptocurrency ban.
The deep March sell-off was also in part caused by China’s ban, and you would expect by now, the market would be immune to such ripples due to the same old news, but sadly not. Crypto assets once again dropped, with Bitcoin going to $40,700, Ether $2,730, and the total market cap to $1.92 trillion.
The good thing about this dip is buying the China dip has worked out well historically for the buyer.
As Pantera Capital noted in its June report, “Investors who sell on China “bans” usually end up bummed…” which happened not only in the case of Bitcoin but also Google, Facebook, and every other disruptive tech that they banned.
Look at these numbers pic.twitter.com/vgKdFFziNe
— Mudrex – Smart Crypto Investing (@officialmudrex) September 24, 2021
On Friday, a notice on “Further Preventing and Disposing of the Risk of Hype in Virtual Currency Trading” appeared on China’s central bank website dated Sept 15.
“Recently, virtual currency trading hype activities have risen, disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, and seriously endangering the safety of people’s property.”
To further prevent and deal with the risks and effectively maintain national security and social stability, it notes that virtual currency does not have the same legal status as legal currency, and related business activities are illegal financial activities.
Anyone investing in virtual currency and related derivatives that violates public order and good customs will be subject to investigation, it said.
Additionally, overseas exchanges offering their services to Chinese residents through the internet are described as “an illegal financial activity.”
In the follow-up to the Chinese policy, one of the most important indicators to observe is how huobi and OKEx, the two exchanges whose main users are Chinese, will react. How Binance will react is also worth watching.
— Wu Blockchain (@WuBlockchain) September 24, 2021
The notice calls for multi-level risk prevention and disposal system in which financial institutions and non-bank payment institutions shall not provide services for virtual currency-related business activities.
It explicitly mentions “severely crack down on illegal financial activities” and “criminal activities” related to virtual currencies. If a crime is committed, it must be transferred to the judicial organ for investigation and punishment according to law.
The PBOC also ordered to strengthen the management of Internet information content and access and the registration and advertising management of market entities, all related to virtual currency.
In response to China's crypto ban, Jeremy Allaire, co-founder and CEO of Circle, urged the US to “be on the right side of history; embrace the open internet of value.”