Last week, the bleeding in the Bitcoin (BTC) and crypto markets persisted, with many crypto assets falling by as much as 50% from their all-time highs last month.
The price of Bitcoin has dropped by 24% this week. Ethereum (ETH) and Cardano (ADA), the second and fourth-largest crypto on the Brave New Coin market cap table, both ended the week down 38%.
Early in the week, a joint alert issued by three Chinese state-backed financial organizations signaled Beijing’s intention to crack down on risky crypto trading and draw a straight line around China’s own central bank digital currency, which sparked sell-offs.
The announcements outlined severe legal penalties for any financial services, banks, or payment providers willing to engage in any type of cryptocurrency financing operation.
Following a brief resurgence, heavy selling resumed on Friday after news broke that a top Chinese government body had called for a ban on cryptocurrency mining. On Friday, Deputy Premier Liu He hosted a meeting of the State Council’s Financial Stability and Development Committee. He proposed a “crackdown on Bitcoin mining and trading activity” during the meeting to “resolutely prevent the transmission of individual risks to society.”
According to the Cambridge Centre for Alternative Finance, China produces 65 percent of the hash power that powers the Bitcoin network. Mining, privately holding cryptocurrency, and over-the-counter (OTC) trading are all legal in China, despite the fact that crypto trading and exchange operation has been prohibited since 2017.
There are now more severe questions regarding a blanket ban on all cryptocurrency-related financial activity, which is causing market anxiety. Market analysts in China are reporting that motivated by fear, miners and major investors in the country are selling out of cryptocurrency positions and leaving the ecosystem entirely.
After news that exchange giant Huobi will be scaling back services due to worries about the Chinese clampdown, markets continued to trend lower on Sunday. Futures contract trading, leveraged investment products, exchange-traded products (ETP), and miner hosting facilities in China are all being phased out. BTC fell from US$38,000 to about $32,000 on Sunday but has since recovered to $35,000.