On Friday, Chinese Deputy Prime Minister Liu He said it was important “to take action against Bitcoin mining and trading behavior” in order to stop the threats to the “social field”. The Chinese authorities have long been concerned with the speculative nature of cryptocurrencies and their threat to the soundness of the monetary system. The latest feedback from the Vice Premier has raised fears that the crackdown will intensify.
But harsh words from Beijing are not new. In 2017, China closed its local cryptocurrency exchanges and banned so-called ICOs (Initial Coin Offerings) to raise money for crypto companies by issuing digital tokens.
In November 2015, according to data from CryptoCompare, a data company for cryptocurrencies, around 92% of Bitcoin trading was carried out using the Chinese currency renminbi. Chinese traders had the opportunity to move the market significantly on all the news related to Bitcoin in China. However, as of November 2017, the Chinese renminbi only made up 0.07% of the total bitcoin market.
“The dwindling influence of Chinese Bitcoin traders is exaggerated,” Graham advised CNBC. “The fact is, Chinese traders are still very influential.”
China’s role in the Bitcoin space was again climaxed last week after authorities reiterated that financial institutions should not interfere in cryptocurrency buy-and-sell transactions or to convert fiat into digital money. These were not new laws.
But it was one of many causes of Bitcoin’s slump last Wednesday, which fell 30% at a level to just over $ 30,000 before being restored. Chinese traders had also advertised, but their trades may have been motivated by various components.
“For the sake of clarity, anecdotally Skittish Chinese private investors were heavily involved in yesterday’s sell-off. However, this was more a function of price action than something to do with local regulations, ”Graham explained on Thursday.