Beijing Warns Residents That Cryptocurrency Trading Isn’t Legal
Amid the blockchain hype that has emerged in China after an endorsement from President Xi Jinping, China has warned its residents not to take this for a sign of cryptocurrency legalization. Various regulatory bodies in Beijing have come forth to issue warnings to firms and individuals not to trade in cryptocurrencies, reported by CNStock, December 27, 2019.
China Doubles Down on Cryptocurrency Ban
When the Chinese premier spoke of the benefits of blockchain and the need for China to become a leader in the industry, it was mistaken by many to be a green signal for cryptocurrencies as well. The day President Jinping made this comment, the price of BTC shot up by 16 percent.
Since then, the Chinese government has taken considerable effort to convey that their message was initially misconstrued, and the Bitcoin market has received the message well and clear, having fallen 30 percent from the height of the announcement pump to the time of writing.
The newest warning urges everyone to “maintain rationality” and avoid participating in or promoting ICOs, or any other form of cryptocurrency. It’s safe to say that China is serious about suppressing the industry within the country. This implies their infatuation with blockchain is just to make back end data propagation more efficient; not to improve systematic transparency or create decentralized economic systems (but we already knew that).
Greatest Driver of the Market
Fundamental developments don’t come to standstill because of China, but the market treats news from the sub-continent above anything else. China’s concerns were at the center of subdued sentiment in 2018.
The fact that over 70 percent of Bitcoin’s hash power comes from China is a major reason it’s taken as seriously as it is. According to Ikigai’s Travis Kling, Asian market makers, most of whom are based in China, provide the most amount of liquidity to bitcoin orderbooks, meaning their ability to continue doing so is directly correlated to the stance the Chinese government takes.
Positive news from China equates to bullish price action on Bitcoin. The decoupling of one from the other is only possible once liquidity can be sourced from anywhere in the world. China’s influence on cryptocurrency cannot be played down, so their continued efforts to ensure trading is kept at a minimum in the country is currently detrimental to the market.
