For the first time in the past three months, Bitcoin’s price came down to $34,000 on Wednesday. The immediate drop in Bitcoin’s price was due to China’s recent announcement that imposed curbs on cryptocurrencies.
Banks and service providers in Beijing were informed not to facilitate any crypto transactions. Speculative crypto trading amongst investors has been banned as well. The immediate ban came as a shock to those who had already invested in cryptocurrencies and participated in crypto-related activities regularly. However, thankfully, there hasn’t been a ban on individuals holding cryptocurrencies as of yet.
In recent interviews with several Chinese industry bodies, it was reported that the reason behind the ban on digital currencies is because crypto prices have skyrocketed and plummeted, and speculative trading has rebounded. The high volatility of cryptocurrencies infringes on the safety of people’s assets and is also a disruption to the regular economic and financial order in place.
However, this isn’t the first time China has stepped up to impose restrictions on cryptocurrencies. The first effort was made back in 2017 when China closed its local cryptocurrency exchanges that accounted for 90% of Bitcoin’s global trading.
Two years after that, in 2019, it was reported that Chinese authorities stated that they would block access to domestic and foreign crypto exchanges. They also made an effort to block websites that offered crypto coins. The supporting argument was that cryptocurrencies have no underlying value, and hence crypto trading isn’t protected under Chinese Law. This happens to be the third time Chinese authorities have made an effort to ban cryptocurrencies.
Ethereum and Dogecoin see a drop in value alongside Bitcoin due to the Chinese crypto ban
Bitcoin isn’t the only crypto that has seen an immediate decline in value; instead, other market-leading cryptos have been hugely affected as well. Ethereum, the fastest growing digital currency in recent events, also suffered a massive 22% drop in value. To put things in perspective, the ban on crypto in China has left the crypto world shaken. Similarly, Dogecoin saw a massive 24% drop in value as well.
The afternoon after the ban was announced, investors were in slight relief as Bitcoin recovered slightly and its value surpassed $ 38,000. However, there was still a 10.4% drop that had a significant effect on the crypto world.
As of now, western regulators don’t feel that there is a threat to them. However, according to Neil Wilson of Markets.com, “China has been putting pressure on the crypto space, but this marks intensification – other countries might follow now as central banks make strides towards their digital currencies. He further added, “Until now, Western regulators have been pretty relaxed about Bitcoin, but this might change soon.”
Tesla shares see a drop in value on Wall Street amidst the recent crypto crisis
It’s no secret that Elon Musk has plenty of exposure to Bitcoin. However, as Bitcoin’s value saw an immediate drop, Tesla’s shares on Wall Street saw a 4.2% fall as well. However, the Bitcoin owner still possesses $1.5 billion worth of Bitcoin and has stated that he will resume accepting the cryptocurrency as a form of payment at Tesla once it shifts to environmentally friendly means.