Bitcoin Dips To Three-Month Low As China Signals Crypto Crackdown
- Written by NewsCo
On Wednesday, Bitcoin plunged to a three-month low as it fell below the $39,000 mark. This new development came after Chinese officials said that cryptocurrencies would not be allowed in transactions, warning investors against speculative trading in them, despite powering most of the world’s mining.
These comments sent the digital currency diving more than 10 percent. Just two days before, Bitcoin had lost about 9 percent of its value, however, rallied back to around $45,000 after Musk’s clarification tweet claiming that Tesla had not sold any Bitcoin. This partial recovery came after a volatile session that saw investors selling and buying cryptocurrencies in the wake of the electric vehicle maker’s Twitter exchange implying it may have sold its crypto holdings.
Since 2019, cryptocurrency trading in China has been banned to prevent money laundering in an effort to stop people from moving money overseas. China had been responsible for around 90pc of the global trade in the sector. And three state-backed industry associations, in a statement, said that the virtual currencies have skyrocketed and plummeted in value and signaled that cryptocurrency trading speculation activities have rebounded.
The People’s Bank Of China (PBOC) through a post on social media expressed concern that these price fluctuations gravely violate people’s asset safety and also disrupt the normal economic and financial order. It further went on to warn consumers against wild speculation stressing that the losses caused as a result of investment transactions would be borne by consumers themselves as the Chinese law does not offer any protection to them. It reiterated that providing crypto services to customers and other crypto-based financial products was illegal for financial institutions and payment providers in China.
These recent developments have only China’s campaign to limit institutional activity in cryptocurrencies while it gets ready to launch its own digital currency, the digital yuan. While other markets such as the US have remained relatively open to institutional involvement.
At present, the bitcoin bears seem to be in full force. However, the digital asset has enjoyed quite the bull-run for the larger part of this year so far. In fact, the price of bitcoin has soared to over 300 percent in the past 12 months, despite its recent sell-off.
In mid-April, it surged to new record highs breaking the barrier of $63,000 but its value plummeted soon after. And while many skeptics are quick to draw parallels to previous bubbles, the European Central Bank noted that the rise in Bitcoin prices has eclipsed major previous financial bubbles such as the tulip mania and South Sea Bubble.
Despite the occasional hiccups in price, Bitcoin has grown in both popularity and value over the last decade. It is currently the most sought-after cryptocurrency in the world both by small and institutional investors.
One of the main driving forces behind this appeal among crypto fans is the notion of Bitcoin potentially being an effective hedge against inflation. Traditional currencies suffer when, for example, more money is printed, diluting the pool and lowering its value. Bitcoin, on the other hand, gets around the inflation problem by capping its supply. Currently, 18.6 out of the 21 million coins are already in circulation.
Since Bitcoin is scarce and is subject to halving, its value has been able to hold up despite the economic conditions. Bitcoin's price has surged over the last year, while other asset values plunged as the pandemic hit. This has helped further push this narrative with many corporate and financial profiles that have since then been getting in on the action.
Also, trading cryptocurrencies has become a lot easier especially for novice investors, due to the availability of trading platforms and tools. Platforms, such as bitQT, offer auto-trading services allowing users to wing big with little input. These employ powerful technologies such as Artificial Intelligence (AI), Machine Learning (ML) in order to make relevant decisions on your behalf so you don't have to spend endless hours analyzing the markets. The availability of such platforms has significantly added to the crypto hype.
Moreover, the crypto space is mostly unregulated. And while this may have turned many away from dealing in these digital currencies, it has, at the same time, allowed many investors to deal in and trade as they wish with cryptocurrencies. Bitcoin, and other crypto coins, have a decentralized network for the operation. This essentially means that no third parties such as banks and government can interfere with transactions as the system is solely peer-to-peer. This also leads to minimal transaction costs. Such qualities have attracted quite the crowd over the last few years.
Although Bitcoin’s value has plunged, it’s a position the digital asset has been in many times before. Many argue that Bitcoin is still in time prime and the era of crypto is just getting started.
Daily Bulletin
