Bitcoin Trims Gains as PBOC Steps Up Crypto Crackdown
Bitcoin trimmed early gains after the People's Bank of China (PBOC) reiterated its long-held anti-crypto stance, warning institutions against providing services to crypto-related companies.
- China's central bank closed down a Beijing-based company providing software services for virtual-currency transactions and reiterated that no institution under its jurisdiction should engage in such transactions.
- Bitcoin fell from $35,100 to nearly $34,000 after the news started doing the rounds on Twitter.
- Both the PBOC and the Chinese government stepped up their anti-crypto rhetoric in May, adding to bearish pressures around the cryptocurrency.
- China's crypto restrictions have been dominating the headlines and taking a toll on market sentiment since mid-May.
- The National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China published a note on May 18, confirming a ban on crypto services and initial coin offerings originally implemented in 2013 and 2017.
- In June, China's Qinghai province banned virtual currency mining. The crackdown was later extended to the southwest province of Sichuan.
- According to some observers, China's mining ban has dramatically reduced competition for block rewards and improved the profitability for miners based elsewhere.
- However, China's mining crackdown is a one-off event, meaning most of the hash power will return, eventually boosting competition and difficulty. There are reports of miners banned in China moving to Kazakhstan, Russia, and the U.S.
- Bitcoin's sensitivity to negative news flow out of China has declined in recent weeks. The cryptocurrency appears to have stabilized near $34,000 at press time after the initial decline.
- While similar comments rocked the market in the second half of June, bitcoin buyers were able to defend the psychological support level of $30,000.
DISCLOSURE
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
