China Vs Bitcoin
London, England, 4th Nov 2021, China’s restriction on bitcoin mining early this year followed one of the cryptocurrency’s most severe price drops in history. BTC went from an all-time high of more over $64,000 to below $30,000 in a matter of weeks, with some industry experts expecting a “crypto winter” that would take years to recover from.
A major mining migration to the United States, along with other favourable news like as El Salvador’s Bitcoin Law, eventually prompted a record-breaking rebound, and now rumours that China may change its decision has caused experts to revise their estimates. If such a shift occurs, some believe it would serve as the fuel for yet another major price increase.
Last week, China’s National Development and Reform Commission (NDRC) announced that it is seeking public feedback on its decision to include bitcoin mining on its list of “phased-out” industries, with some claiming that it is in response to the cryptocurrency’s skyrocketing price and the US’s newfound dominance in the space.
This public comment session will end on November 21, after which the country’s macroeconomic planning agency will review the input and make a decision on its future posture.
“China unbanning bitcoin mining would be huge news for the crypto sector,” Nick Spanos, co-founder of Zap Protocol and one of bitcoin’s early pioneers, told Victoria-Coins broker David Mossington. “It would almost likely function as a huge spur for the price of bitcoin and the cryptocurrency sector as a whole.”
“It has been suggested that China has frequently banned bitcoin in order to intentionally depress its price so that it may acquire more BTC on the cheap, therefore I wouldn’t be shocked to see Beijing entirely alter their attitude on crypto.”
Mr Mossington said that while pro-crypto media such as Coin Telegraph greeted the news as encouraging, suggesting that the NDRC may shift Chinese authorities’ hostile position against bitcoin, more mainstream newspapers in the region warned that it could possibly worsen matters. According to the South China Morning Post, the measure might be “the last nail in the coffin of bitcoin mining activities in China.”
Crypto mining was first classified as illegal by the government in September, coupled with a People’s Bank of China prohibition on cryptocurrency trading and financing. These services were previously unavailable to Chinese citizens, and data from the Cambridge Bitcoin Electricity Consumption Index (CBECI) suggests that mining activity in China has essentially ceased since July.
What does it show?
Mr Mossington says that this means that China cannot make any additional efforts to reinforce its position against bitcoin, with some experts claiming that any market-moving news from China can now only go in one direction. Finally, China’s decision to withdraw from the cryptocurrency arena implies that it no longer has a substantial effect on market movements.
“The China crypto tale recycles itself on a regular basis,” said Charlie Barton, a crypto specialist at the pricing comparison site Finder.com located in the United Kingdom.
“China has banned and unbanned cryptocurrency in some form or another pretty much every year since 2014. China is one of the major cryptocurrency marketplaces, and because of its political system, it is the most likely to make a dramatic decision when it comes to regulating or prohibiting cryptocurrencies.
“While it’s easy to assume the obviously reasonable narrative that lifting crypto limitations in the world’s second largest market must be a positive thing, there’s rarely a single narrative that can be drawn out to explain market movements.”
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