Bitcoin Plummets to $41K as China Shuts the Door on Cryptocurrencies

While China does not seem to be enthusiastic about cryptocurrency, this is obvious. The government has just put an end to the mining business as a whole by initiating a crackdown on Bitcoin miners. The People’s Bank of China (PBOC) announced that all cryptocurrency transactions are prohibited.

All services that enable trading, order matching, the issue and trading of tokens, and derivatives trading for digital currencies are banned in China as of this morning. The PBoC issued a statement declaring, “With respect to virtual currencies, financial institutions and non-bank payment institutions cannot provide services to activities and operations linked to them.” Some foreign exchanges still provide service to Chinese citizens even though a multi-year crackdown has been implemented on them.

Although overseas virtual currency exchanges that utilize the internet to provide services to local people are also deemed unlawful financial activity, according to the regulators, this is true as long as they are using it to conduct financial activities on a national level. As if that weren’t enough, the apex bank has set its sights on those who work for these foreign exchanges and who are residents of China.

The statement further said that these employees may be prosecuted as well. New regulations are likely to cause OTC trading platforms in China to suffer. In Asian countries, OTC platforms have gained in popularity because traders look for innovative methods to circumvent regulatory roadblocks. On these websites, platforms match orders and subsequently transfer the money to the trader through Ant Group’s Alipay.

Despite being formerly China-based, OKEx and Huobi have emerged as the top leaders in the OTC market, with Binance not far behind. The fate of the three will be revealed if they stop offering their OTC trading desks in China. As a result of the statement, Bitcoin dropped over 6% in value. The top crypto saw a 5.9 percent decrease, from $45,054 to $42,363. at press time, the price of the stock is $42,638, which is down 2.5% in the previous day and 10.3% in the past week.

Litecoin and all altcoins were struck down, too. Both Ethereum and Binance Coin were down 6%, along with Dogecoin, FTX, XRP, and Solana. Ethereum Classic, ICP, Uniswap, and Filecoin experienced more significant losses.

While some say the decline was not anticipated, it may mean an overall negative market is in the works. Joseph Edwards, CEO of bitcoin brokerage firm Enigma Securities said on Irish state broadcaster RTE:

Overall, crypto markets are in a vulnerable condition, and downturns such as these point to this. There is a high degree of stress in the market. He claims that the Chinese government has made a significant effort to set up an appropriate regulatory framework for the cryptocurrency sector, but has fallen short in achieving so. While it has established firm ground rules banning the use of cryptocurrency for financial transactions and ICOs, it has not released final guidance for the crypto sector yet.

He said that in China, “crypto persists in the realm of legality on a gray scale across the board.”