In a sign of the way ahead, the Chinese central bank announced that all cryptocurrency-related transactions are illegal and must be banned. On its website, the People’s Bank of China emphasized that cryptocurrencies were not fiat currency and could not circulate in the open market. The PBOC stated in its statement that all crypto-related transactions, including those conducted through offshore exchanges to domestic residents, are illicit financial activities.
Bitcoin fell 5.5% as a result of this latest harsh directive on Friday, as global markets grow increasingly concerned about the debt crisis involving property developer China Evergrande Group. In addition, the Chinese government may be reacting to reports that miners are disguising their activities to remain in business.
With the recent SEC comments and the overall macro environment with the Evergrande news, cryptocurrency trader Vijay Ayyar, head of Asia Pacific at cryptocurrency exchange Luno in Singapore, indicates ‘a slightly nervous environment for crypto’. The Chinese government has previously made similar statements. As a result, any comments of this nature would cause a sell-off of risky assets.
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According to China’s economic planning agency, it is urgent for the country to crack down on crypto mining, as it is important to meet carbon emission targets. According to Antoni Trenchev, co-founder of crypto lender Nexo, investors should expect a knee-jerk reaction as China snuffs out Bitcoin’s wind. Furthermore, recent gains from just below $40,000 likely have run their course for now.
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