In the past, September has never been a good month for cryptocurrencies. September 2021 will be no different. Indeed, it has been marked by concern about the restart of the bull market. Furthermore, the recent announcement of new Chinese restrictions has had an impact on the price of Bitcoin (BTC).
New Chinese Restrictions: Price of Bitcoin drops
As of September 12th, reports of new Chinese restrictions were emerging on the social media sites WeChat and Weibo. Several reasons contributed to Bitcoin’s price drop in September, when the currency was seeking to break past the $47,000 barrier.
On September 24th, the People’s Bank of China (PBoC) held a question and answer session, confirming the rumors. In the document, which was issued on September 15, three regulatory goals for digital assets are detailed in several pages, including:
- Clarify essential characteristics of digital currency and associated activities;
- Create a solid functional system to handle the danger of speculative trading in digital currencies.
- In digital currency trading, improve monitoring and early identification of speculative risks.
New Chinese Restrictions for Digital Assets
After previously stating that cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) are prohibited to trade in China, China’s central bank has issued further restrictions. Various commercial operations using digital currency are illegal, including trading services and information regarding digital assets.
The same is true for any activity that involves the creation of digital assets or the funding of initiatives utilizing digital assets. Individuals and corporate directors who breach these rules may face criminal prosecution.
Finally, foreign currency firms are not allowed to provide their services to Chinese citizens. Foreign companies that provide digital asset trading services are now classified as conducting “illegal financial operations.” The change will have a substantial influence on OTC services, which are still available on Huobi, OKEx, and Binance.
Bitcoin falls in response to the Chinese FUD
When the PBoC released its statement in reaction to the May 2021 mining limits, the price of Bitcoin fell by over $3,000 per coin.
Was this just another hyped version of “Chinese FUD,” the nearly cyclical event in which China charges Bitcoin every 6 weeks, or a symptom of a broader movement? Even if the mood this week is pessimistic, as JP Morgan suggested that Ethereum (ETH) is currently expensive, the next several days should set the tone, from a fast bounce to a continuous downward trend.