China and Its Negative Attitude Towards Crypto
At first glance, it seems like bitcoin would have steadied by now, though it appears the currency is sliding even further. The asset is trading for about $30,000 even – less than half of what it was in April. Yet, despite how much bitcoin is suffering, it seems like China is going to suffer even more.
There was a time when the country accounted for anywhere between 65 and 75 percent of all mining activity in the world. Now, however, China has lost this number one position, which has allowed regions such as Canada and Kazakhstan to step into the limelight. China has easily lost its competitive edge, and bitcoin has even recalibrated itself to ensure that China miners are not needed anymore should they ever decide to return to the space.
Oleg Kurchenko – founder and CEO of Binaryx – stated in an interview:
Miners are actively migrating from large farms and taking out the equipment. We assume that industrial mining in China is dead… During the last sharp rate drop of cryptocurrencies, small traders closed their positions. It was predictable… This was not the first time the Chinese government went against bitcoin. When the market is stuck in a bearish mood, it is difficult to predict when the next crypto madness will happen and if bitcoin will reach its prior price highs.
More Room for the Digital Yuan
Ian Lowe – CEO of crypto startup Dacxi – also added his two cents to the mix. He says that China has consistently had an up-and-down relationship with bitcoin, having banned crypto exchanges and initial coin offerings (ICOs) in the past. He suggested that it was only a matter of time before the nation went after crypto miners as well. He says:
China’s more recent enforcement of these bans is in large part to de-risk the release of their own digital currency. A digital yuan will provide unprecedented government oversight on every aspect of the Chinese economy, including making it more difficult to transfer wealth out of China. The mining ban has clearly impacted the efficiency of the bitcoin blockchain in the short term, but it is unlikely to have an enduring effect on the value of bitcoin because its utility and breadth of ownership has become too vast. Will governments look to ban bitcoin? It is possible, but sophisticated, regulated economies will simply regulate it in the same way they regulate financial markets already. Very few governments see the sense in pushing the trading of bitcoin exclusively into unregulated environments.
Analysts predict that if bitcoin is to rise again before the end of the year, it is likely to only hit the $50,000 range rather than its all-time high again.