As you probably already know, this has been a pretty bloody day for the price of Bitcoin. BTC’s massive sell-off was forceful in just 24 hours. That is why we present the main factors that have influenced this Bitcoin crash below.
At the time of writing, BTC is worth $ 35,600. The daily range has remained between 30K and 43K. This represents a net change of $ 13,000, according to CoinMarketCap. Thanks to this, other cryptocurrencies besides Bitcoin have also been severely affected. A key factor in this is China.
Influencing factors in the crash of Bitcoin
This time around, news that China took more steps to crack down on digital currencies has led to a significant crash in the price of Bitcoin. The drop in dollar terms was average by Bitcoin standards, but this did not prevent the selloffs from spurring.
Now in China financial institutions and payment companies should not participate in any transaction related to cryptocurrencies. This came at a time when Bitcoin was already considerably weakened thanks to the statements of Elon Musk, CEO of Tesla, about the environmental impact of it.
The official statement came from regulators supervised by the People’s Bank of China and the China Banking and Insurance Commission. «Cryptocurrency prices have recently spiked and fallen, and speculative trading has rebounded. This seriously damages the security of people’s property and disrupts the normal economic and financial order.“Said the document.
Additionally, whales have participated in much of these daily settlements, according to data from CryptoQuant.
Is this the first time that China has attacked cryptocurrencies?
Although cryptocurrencies are not expressly prohibited in the Asian country, regulators declared, in 2013, that Bitcoin was not a real currency. As a consequence, they prohibited financial and payment institutions from transacting with it.
At the time, they cited the risk that Bitcoin could be used for money laundering. They also stressed its need to “maintain financial stability” and “protect the status of the yuan as a fiat currency.”
The public can own or trade cryptocurrencies, but that trade has been closed to major exchanges in mainland China. In 2017, the authorities also banned initial coin offerings.
In parallel to this, they have advanced in their project of the digital yuan. This is a CBDC, or central bank digital currency, backed by the country’s government. Therefore, it is not surprising that in the interest of promoting their use, they seek to decrease the promotion of other cryptocurrencies. Therefore, the crash of Bitcoin can be closely linked to this fact.