Bitcoin took a heavy hit on Monday amid nationwide repression against cryptocurrency mining in China. The world’s largest cryptocurrency dropped 1.17% to $34,998.68 as of 10:45 pm EST on June 21 on coinmarketcap.com. On June 18, the local authorities at the southwest province of China’s Sichuan Province had requested a stop on mining Bitcoins in the midst of worries over energy utilization. After the most recent order, more than 90% of China’s Bitcoin mining limit is required to close down, as per reports.
Despite dropping to half of its value after hitting a high in April 2021, the cryptocurrency market still remained volatile in the past few weeks. The market value of all cryptocurrencies is about $1.45 trillion against a high of around $2.6 trillion last month, according to CoinGecko. About 65% of the world’s Bitcoin mining occurred in China as of April 2020, as per a report by the University of Cambridge.
China several years ago imposed bans on domestic cryptocurrency exchanges and digital-currency fundraisings known as initial coin offerings. Authorities also previously instructed payment providers and banks to stop providing virtual-currency trading and related services and ordered the closing of mines. People in China have also continued to trade bitcoin and other digital currencies via peer-to-peer transactions that involve direct money transfers between accounts.
The analysts have presented their worrying views on China’s clamping down on cryptocurrency mining. Edul Patel, chief executive officer, and co-founder, Mudrex, says, “The selling pressure that we witnessed last week continues to trouble the cryptos coming into this week. The trading volumes for both Bitcoin and Ethereum have increased. It indicates increased activity among both buyers and sellers. However, the bears seem to be overpowering the bulls at the moment.”
“Bitcoin started the week above the $35,000- mark and looks like it is finding it difficult staying there. It is a sign of traders being watchful and booking profits. Ethereum started at $2165.45 and crossed $2200 before declining to around the $2,000-mark. Ethereum traders will be looking closely at the $2,000 support level, as this is usually considered to be a psychological support level,” Patel added.
The PBOC on Monday warned of the risks to economic and financial stability created by virtual currencies, and the potential for the assets to be used for illegal activities. Five banks, including Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd., China Construction Bank Corp., Postal Savings Bank of China Co. Ltd., and Industrial Bank Ltd., said in separate statements that they prohibit the use of their accounts for virtual currency transactions. They pledged to promptly put a stop to such transactions, close bank accounts, and report signs of such activities to the authorities. They also called on members of the public to report virtual currency-related transactions to the banks.