Bitcoin Downtrend Again As China Ramps Up The Pressure On Cryptos

June 24, 2021 Hiren Patel

Bitcoin tanked on Monday as China escalated its crackdown on cryptocurrency by further curbing mining activity and telling major payment platforms and lenders that crypto trading won’t be tolerated.

Bitcoin plunged over 9% last day to trade at around $32,700 per coin, a two-week low, according to Coindesk. Prices stabilized a bit on Tuesday, but the coin has still lost roughly half its value since it hit an all-time high in April.

Other cryptos were also caught up in Monday’s big sell-off: Ethereum fell about 14% while Dogecoin dived as much as 41%, erasing all of its gains since April and so are others coins too.

Cryptocurrencies have had a rough couple of months for a few reasons, including concerns about the environmental impact of mining coins and increasing government scrutiny in countries like China.

Crypto continues to catch a lot of heat from China, which has been signaling a more aggressive push to curtail the use of cryptocurrencies for months.

The People’s Bank of China on Monday said it summoned Alipay, the widely popular online payments platform run by Jack Ma’s Ant Group, along with five big lenders and told them to “comprehensively investigate and identify” cryptocurrency exchanges and dealers so they can cut off any crypto trading or mining happening in China.

“Cryptocurrency trading and speculative activities … breed the risks of illegal cross-border transfers of assets and money laundering,” the central bank said.

The lenders included the Industrial and Commercial Bank (IDCBY), the Agricultural Bank of China, the Postal Savings Bank of China, the China Construction Bank (CICHF), and the Industrial Bank.

All six companies said in statements issued after the central bank announcement that no institutions or individuals are allowed to use their platforms for any crypto-trading. In addition to those remarks, Alipay also pledged to step up investigations against crypto transactions happening on its platform.

The announcement isn’t a new policy for Beijing, but it does reinforce how far the country is willing to go against the usage of bitcoin and other digital coins for transactions.

Over the weekend, Chinese state media reported that the southwestern Chinese province of Sichuan ordered a halt to all crypto mining operations and cut off the power supply to many mining farms. The province was a major hub for mining Bitcoin, using powerful computers to run and solve algorithms that generate new cryptocurrency coins and verify transactions.

While China did not completely ban cryptos, regulators in 2013 declared that bitcoin was not a real currency and forbade financial and payment institutions from transacting with it. At the time, they cited the risk that bitcoin could be used for money laundering, as well as the need to “maintain financial stability” and “protect the yuan’s status as a fiat currency” they declared Bitcoin illegal.

The growing crackdown is also in part to boost China’s state-backed digital yuan initiative, which authorities want to implement so they can keep money flows in check and track money laundering.