Bitcoin price drops $4K as China’s Central Bank hardens crackdown

Key Takeaways

• A new circular issued by the People’s Bank of China distrupted the crypto markets on Friday
• The outdated circular, issued almost 10 days back, kicked in an FUD phenomenon, sending prices plumetting
• Bitcoin (BTC) shed over 4K while Ethereum (ETH) experienced an over 13% price drop

YEREVAN (CoinChapter.com) — The People’s Bank of China (PBoC) hit the crypto industry like a wrecking ball again on Friday. In an updated circular, the apex bank added another prohibition, eliminating any doubt that it just cannot stand cryptocurrencies. Bitcoin (BTC), among other cryptos, took a hit.  

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⚠️BREAKING:

*CHINA'S CENTRAL BANK SAYS ALL CRYPTOCURRENCY-RELATED ACTIVITIES ARE ILLEGAL, VOWS HARSH CRACKDOWN#BTC #BITCOIN pic.twitter.com/Q8Q0ObuCmZ

— Investing.com (@Investingcom) September 24, 2021

The PBoC once again reaffirmed that cryptos are not a legal tender in China and crypto mining is illegal. Moreover, it banned financial organizations, cryptocurrency exchanges, online platforms, etc from facilitating cryptocurrency trading.

As a result, the most popular crypto in the world shed a couple of thousand dollars. Along with Bitcoin (BTC), Ethereum (ETH) nosedived as well. 

While BTC dipped less than 10%, ETH had to shed over 13% following the circular.

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China hates Bitcoin (BTC) and cryptos 

By now it is no secret to anyone following the industry, that Chinese authorities loathe cryptocurrencies. 

The country once again caught global attention after a heavy crackdown on Bitcoin (BTC) miners in May this year. 

In 2013 the Chinese government defined Bitcoin(BTC) as a virtual commodity and allowed individuals to freely trade Bitcoin online. However, the positive mood did not last long.

Later that year, Chinese financial regulators, among them the People’s Bank of China (PBoC), banned banks and payment companies from providing bitcoin-related services.

Bitcoin mining companies this week started to leave China as authorities cracked down on crypto: https://t.co/iDE8Nmx6H0

— Forbes Crypto (@ForbesCrypto) June 26, 2021

In September 2017, China banned Initial Coin Offerings (ICOs). According to justifications provided by the authorities, the ban intends to protect investors and curb financial risks. Under the ban, the authorities prohibited companies from converting Chinese legal tender to cryptocurrency and vice versa. 

As a result, many trading platforms shut down operations in China. Many of those that could afford it moved their operations to other countries. For example, Chinese blockchain developer Bibox moved to Estonia. Companies like Huobi and OKEx also left China.

In 2019, the People’s Bank of China notified of its intention to block access to all domestic and foreign cryptocurrency exchanges and Initial Coin Offering websites. The Government later also made clear that they intend to shut down mining in the country and cut down the electricity supply used for mining operations, intensifying the crackdown.

Shenzhen-based BIT Mining shifted to Kazakhstan as a result of the Chinese crackdown. 

The People’s Bank of China (PBoC) also reportedly stopped the operations of Beijing Tongdao Cultural Development Co., Ltd. The apex bank suspected the company of Cryptocurrency trading.

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Bitcoin (BTC) sheds $4K despite the old news

As a result of the continued crackdown, the Chinese central bank termed cryptocurrency “illegal” and vowed to uproot it from the country. 

Ten different Chinese government agencies vowed to jointly impose a “high-pressure” clampdown on those trading in cryptocurrencies in China. Thanks to the updated circular, even overseas exchanges are prohibited from providing services to Chinese investors via the internet.

PBOC’s announcement about ban crypto got widespread today is was ANNOUNCED ON SEPTEMBER 15TH, but got posted online today. The market already reacted on those regulatory fud.https://t.co/BPlVQEMVMt pic.twitter.com/e0U7gbEHnY

— Molly (@bigmagicdao) September 24, 2021

Although the apex bank released the circular days earlier, on September 15, it appeared on the internet late. As it has become common practice whenever China does something about cryptos, the FUD (fear, uncertainty, doubt) factor kicked in. 

However, it seems people in China had already got the wind of it, and rumors about the circular were already in circulation. Chinese crypto enthusiasts Molly took to Twitter to advise people not to fall for the FUD again.

There’s new wave of China regulation fud rumors start to gets wide spreading on WeChat and Weibo .

— Molly (@bigmagicdao) September 12, 2021

Nevertheless, FUD or not, it still caused disruptions in the cryptocurrency market. 

Bitcoin (BTC), which had just tested $45,000, fell as low as $40485.

It has slightly recovered, currently trading at $42,503

In the meantime, some traders opted to see the good news behind all this. After all, cryptocurrencies had grown more popular with each Chinese Crackdown. 

Nothing has created more wealth in the past decade than technologies banned in China. #Bitcoin

— Michael Saylor⚡️ (@michael_saylor) September 24, 2021