How China’s crypto crackdown and Kazakhstan’s crisis has affected the market – shock chart
Cryptocurrency: Expert on how financial system is being 'remade'
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The Chinese government has made significant moves to curb the use of cryptocurrencies since 2019, but its latest crackdown last year outlawing all crypto transactions within the country has caused prices to nosedive. Kazakhstan’s recent internet blackout has halted crypto mining causing prices to plummet further.
Prices in all major cryptocurrencies have plummeted this week.
In the past 24 hours bitcoin, Ethereum, Binance Coin and Cardano have all dropped in price alongside the vast majority of other cryptos.
Bitcoin has fallen by 11.73 percent in the past seven days to $41,808.21 according to Coin Market Cap as of January 9, 12.55 GMT.
Ethereum has fallen by a staggering 16.94 percent over the same period and Binance Coin fell by 17.11 percent while Cardano dropped by 14.82 percent.
China was one of the world’s largest crypto markets and fluctuations in the Chinese cryptomarket impacted the global price of cryptocurrencies.
But trading cryptocurrencies was officially outlawed in 2019 in China as the government sought to crack down on crypto.
China’s announcement caused prices of bitcoin (the world’s largest cryptocurrency) to fall below $34,000 (£24,030).
Prices weren’t the only aspect of the market affected by the crackdown, with the mining landscape also shifting dramatically.
In September 2019, China’s mining of bitcoin accounted for 75.5 percent of the market, but this fell to zero percent by August 2021 according to Statista.
This is because in September 2021 China enforced an even tougher crackdown on cryptocurrencies by declaring that all cryptocurrency transactions would be illegal.
The People’s Bank of China warned that cryptocurrencies “seriously endangers the safety of people’s assets”.
It added: “Virtual currency-related business activities are illegal financial activities.”
Since China’s crackdown, the prices of crypto have dropped dramatically.
Why has China cracked down on cryptocurrencies?
Crypto experts believe China’s dislike of crypto centres around their inability to control it as these currencies are famously volatile, decentralized and largely unregulated.
Jim Cramer, a former hedge fund manager and CNN business expert told The Guardian the Chinese government “believe it’s a direct threat to the regime because it is outside their control”.
Chris Bendiksen, head of research at CoinShares, told CNBC: “It should surprise no one that China doesn’t like bitcoin.
“It is the pure antithesis of their regime of top-down centralized currency control.”
How has Kazakhstan’s internet blackout impacted the crypto market?
The recent crisis in Kazakhstan has also sent crypto prices tumbling.
Kazakhstan’s government has enforced internet blackouts across the country in a bid to quash mass protests over government corruption, inequality and poverty.
Since China’s ban on crypto transactions, Kazakhstan’s mining has grown since 2019.
By August 2021 the country accounted for 18.1 percent of the global mining of bitcoin.
The internet blackouts have effectively stopped Kazakhstan’s crypto mining, causing prices to plummet.
The information in this article does not equate to financial advice. Anyone considering investing in cryptocurrency should understand the risks involved.
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