Since the inception of bitcoin, the Chinese government has been pursuing the cryptocurrency. They have imposed bans upon bans and cited the many risks associated with it.
Over a decade, China’s FUD (shorthand for fear, uncertainty and doubt) has increased in the industry. Each time, crypto suffered a huge hit. Last week, bitcoin’s value fell by more that 5% in less than 24 hours due to another regulatory reiteration by the Chinese authorities to ban cryptocurrency.
Before we get into the history of China FUD, let’s first look at some good and bad news. This kind of Chinese FUD will likely continue at least for the next few years. The good news is that Bitcoin’s price seems to be declining over time as BTC becomes more resistant.
China FUD vs. Bitcoin
One might believe that it is a coordinated effort to lower bitcoin’s value with the constant bans and repetitive threats. This is perhaps a tale for another day.
Let’s take a trip down memory lane to see how China has raised FUD levels on the crypto market by its incessant hostile stance, vows to end crypto activity, and how the industry continues triumphant.
China bans Bitcoin. Source: TradingView
2009 – Ban Digital Currencies
Just a few months after the launch of bitcoin, China’s Ministry of Commerce & Ministry of Culture prohibited the use of digital currency in payments for real-world goods & services.
However, the move was not specifically targeted at bitcoin. Instead, it was meant to curb several video-game currencies which were allegedly devaluing yuan.
2013 – China Pops After Bitcoin’s First Major Bull Run
Four years later, the most populous nation in the world made its first direct attack against bitcoin. In December 2013, it called it a currency with no real value.
The People’s Bank of China and the IT Ministry issued a note directing all Chinese financial institutions to cease processing bitcoin transactions.
That notice had an immediate effect on bitcoin’s price. It plummeted massively just after crossing the $1k mark. This was the first of many price impacts.
The People’s Bank of China. Archive
2014 – China FUD Drives the Bear Market
After rebounding from the 2013 China FUD the crypto industry was again hit with another devastating report: the “PBoC placed an outright ban Bitcoin transactions.”
Although the news was false and was not published by Weibo in March 2014, it had a devastating effect on the market. The result was that bitcoin’s price plummeted after thousands of investors and traders sold their positions. BTC, which had traded above $1k by the end of 2013, was headed towards $400 three months later.
2017 – China Exchanges Forced To Leave China
2017 will be remembered as a landmark year in crypto history. Although it was the first bitcoin transaction to exceed $20,000 in December 2017, the Chinese government provided more confusion than usual.
The PBoC issued two regulatory bombs mid-2017. The ban on Initial Coin Offerings (ICOs) was the first. These were popular at that time. The second ban was for cryptocurrency exchanges.
Authorities insisted that all ICOs in China should be stopped immediately, citing the fact that they were illegal forms public financing and not authorized by China’s financial regulators.
The PBoC issued yet another ban notice to the crypto market in mid-September. Each cryptocurrency exchange in the country was ordered to cease operations by September 2017. This was due to concerns about their involvement in criminal activities such as drug trafficking, money laundering and smuggling.
Binance, one of the most prominent crypto exchanges, was forced to relocate. Crypto traders throughout the country were required to transfer their trading activities via VPNs to foreign platforms.
The leading cryptocurrencies saw their prices drop. The market recovered in three months and even became a breaking point for crypto around the world. In December 2017, BTC reached its all-time high (ATH), of $20,000
2018 – Targeting Mining
Bitcoin experienced one of the largest price crashes in its history in early 2018. The value of Bitcoin’s primary digital asset plunged by over 65% to USD in February 2018, shortly after reaching highs of $20,000 at the end of 2017.
Although there were no clear reasons for the drop, many reports suggest that it was related to the Chinese New Year as well as rumors about a crackdown on crypto-mining.
According to reports, China issued another document in August 2018 that officially banned all crypto-related activities within the region. This paper was focused on communication channels and prohibited WeChat accounts, media outlets, or any other venues from hosting any crypto-related events.
2019 – Bitcoin Mining Ban Confirmed
Rumours of a crackdown on Bitcoin mining were confirmed by April 2019, when a draft warning was issued by the National Development and Reform Commission (NDRC). It stated that the regulator planned to end these activities in China.
Draft argued that Bitcoin mining violated relevant laws and regulations and polluted our environment. BTC’s value dropped again.
2020 – Ordered Power Stations to Stop Power to Miners
Many Chinese miners sold their crypto holdings at the beginning of the COVID-19 Pandemic. This led to a massive bloodbath that saw bitcoin and nearly all altcoins lose more than half their value in March.
Despite the worldwide pandemic, Sichuan’s local government sought to ban cryptocurrency mining in the province.
The market was again hit by a ban against crypto trading in October. Five times the crypto fund value was threatened to fine offenders.
The Yunnan provincial government issued a mandate to power stations to cease providing electricity to the city’s crypto miners in December. This led to a dramatic drop in bitcoin’s hashrate.
Bitcoin was able to surpass the $20,000 mark, and ended 2020 with a new ATH in excess of $30,000. The hashrate recovered somewhat quickly, too.
2021 – China’s Miners Are Expelled from China: Crypto Is Illegal
2021 was a year of bitcoin and the entire crypto market. BTC set new records after surpassing 30,000 in the previous year and reaching $65,000 by mid-April.
The Chinese government launched a national campaign to stop crypto trading and mining. However, it quickly turned things around for crypto traders. The Chinese government reiterated for the 20th consecutive time its warnings to citizens about the dangers associated with investing in “speculative” assets.
Even though all payment gateways and financial service providers in the country have been banned from working with crypto entities in the past 2013, the news broke in May 2021, sending the crypto market plummeting. In just weeks, Bitcoin lost almost half of its value.
China has increased its efforts to combat crypto activity in the past four months. Officials reiterated the ban on bitcoin mining in June and launched a massive crackdown against bitcoin mining facilities. Miners were forced to close down their machines.
This clampdown not only affected key on-chain metrics and caused price drops, but also triggered the Great China Mining Migration (still ongoing), in which miners from the region began moving to more crypto-friendly areas.
Another report was published in July that said the PBoC had shut down a technology firm that was allegedly providing software services for local cryptocurrency entities. The news immediately caused Bitcoin to drop in price.
China pursued crypto influencers in August. The government closed down the website of China’s top-profile blockchain center and its social media accounts.
The market suffered another setback on September 24th when the PBoC declared that all crypto-related transactions within the country were illegal. Even though it was news from September 3, bitcoin prices still plunged $4,000 within hours. This led to massive liquidations.
Verdict: Bitcoin Always Triumphs
The Chinese authorities have tried many times to force bitcoin out of existence over the years. However, all their efforts have been unsuccessful. As the market recovers from any blows it gets from the Asian giant, the crypto industry continues its growth.
Bitcoin is still the most popular cryptocurrency. This is due to large institutional investors supporting its adoption.
Based on the pattern of previous cases, bitcoin can often go on a huge bull run within a few weeks after it has suffered the same regulatory effects from China.
Is China’s latest attack a catalyst for bitcoin to move on to another ATH. We will only know the outcome when it is too late.
Marla Brooks – Financial Analysis
My name is Marla Brooks, and I am the mainstream behind the”observednews.com” for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.