Digital currencies were derailed again – but it may only be temporary.
Sure, China’s central bank said all cryptocurrency related transactions were now illegal.
According to the People’s Bank of China, services offering trading, order matching, token issuance, and derivatives are now prohibited, as are overseas cryptocurrency exchanges that provide services in China.
However, investors may want to use the pullback as an opportunity.
For one, China has threatened cryptocurrency trading several times in the past, and markets continue to shrug it off. In fact, according to CNBC, “China has periodically tried to restrict crypto activity and Bitcoin has shrugged it off. Not including the latest crackdown, China has announced tough new measures on crypto six times since 2013. Bitcoin fell an average 4% in the week after the announcements but was up an average 46% a year later.”
Two, investors don’t seem to take Chinese threats seriously.
According to Crypto Potato:
- In 2009, China’s Ministry of Commerce banned the use of cryptocurrencies.
- In 2013, China called Bitcoin a “currency without real value” and mandated that every China’s financial institution had to stop processing Bitcoin transactions.
- In 2015, China again banned Bitcoin transactions.
- In 2017, China banned Initial Coin Offerings (ICOs) and mandated that crypto exchanges discontinue their services.
- In 2018, China again banned cryptocurrency activities.
- In 2019, China said Bitcoin mining did not adhere to laws and regulations.
- In 2020, China sought to ban cryptocurrency mining again. Power stations were also told to stop providing power to miners in the Yunnan province.
- In 2021, China says cryptocurrencies are illegal.
However, each and every time, cryptocurrencies came right back.
“For the past years, the Chinese authorities have often tried to bully bitcoin and force it out of existence, but all its efforts – so far – have always proved a failure. The crypto industry continues to thrive as the market usually recovers from whatever blows it receives from the giant Asian nation,” added Crypto Potato.
Better, most of the miners bounce back along with major cryptocurrencies, like Marathon Digital (MARA), Riot Blockchain (RIOT), and Bit Digital (BTBT).
The post This is Why the Pullback in Cryptocurrencies is Only Temporary appeared first on Morningology.
