In another testament to the emerging market’s extreme volatility, cryptocurrency prices fell Friday morning after China’s central bank reiterated a blanket ban on digital asset transactions, leading some experts to warn that harsh rhetoric may encourage more countries to take similar measures, Others noted that prices have recovered quickly from such advertisements in the past.
The value of the world’s cryptocurrencies plunged to about $1.8 trillion by 7:15 a.m. ET on Friday, plummeting nearly 9% and losing $188 billion in market capitalization within just three hours of the China announcement, according to crypto data site CoinMarketCap. .
The stark drop wiped out nearly all of the gains since the sell-off of global stocks on Monday leading to the worst drop in the cryptocurrency market in weeks, with cryptocurrencies such as Bitcoin, Ether and Solana dropping between 6% and 10% each on Friday morning.
In a note on Friday, analyst Adam Crisavoli of Vital Knowledge Media noted that China’s announcement was “very consistent with its previous rhetoric,” but still cautioned investors against buying at current prices because Beijing’s actions will likely be adopted by other countries, with India from Among the largest economies expressing hesitation towards cryptocurrencies.
Meanwhile, Freddy Williams, of digital asset broker GlobalBlock, said he saw little to no quick reaction from clients after the latest ban, adding that the market could bounce back once the temporary fear subsides, as it did after Monday. drop.
Williams further noted that China has repeated the so-called Bitcoin ban several times over the years (most recently in May), but it still hasn’t stopped institutions, especially in the US, from boosting cryptocurrency adoption at an astonishing pace.
Crypto Investor Mike Novogratz, Bitcoin Bulldog Powerful Bitcoin Bull, Has His Weight Too TwitterThe world’s largest cryptocurrency may continue its struggle to break into the $45,000 price again, but the “secular story is as strong as ever,” he said.
Starting in late 2017, a wave of early regulatory action led to a nearly 80% crash in cryptocurrency prices and a years-old bear market. At that time, many countries, such as South Korea, began cracking down on initial coin offerings, the then booming crowdfunding technique used to raise money by minting new digital currencies. That same year, China announced a blanket ban on cryptocurrency transactions, saying that financial institutions were prohibited from directly or indirectly providing trading, settlement or insurance services to virtual currency firms — measures emphasized in a government announcement on Friday. Officials also reissued the regulation in May while warning of additional rules to come. China introduced its first major regulatory action towards cryptocurrencies in 2013, when it banned bitcoin as a medium of transactions while recognizing it as a virtual property.
Bitcoin and the broader cryptocurrency market have surged during the pandemic in light of inflationary fears and growing institutional dependence, but prices ended a year-long rally in April, when Tesla — one of the largest corporate investors in bitcoin — revealed that it had sold a significant portion of its holdings and would not buy more until it consumed mining. Bitcoin is less energy. Markets have largely failed to recover since then amid China’s intensified regulatory crackdown, with the value of the world’s cryptocurrency still around 30% below its peak of nearly $2.6 trillion on May 12.
“China’s authoritarian crackdown on cryptocurrencies, including #Bitcoin, is a huge opportunity for the states,” Senator Pat Tomey (R-Pen), one of several lawmakers who has introduced legislation to help ease potential cryptocurrency regulation in the United States, said Friday. United”. employment Twitter, adding: “It’s also a reminder of our enormous structural advantage over China.”
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