Historically, September has never been a bullish month for cryptocurrencies. And September 2021 is no exception. Indeed, the latter has been marked by uncertainty about whether a bull market will resume. In addition, the announcement of new Chinese regulations has just rocked the price of Bitcoin (BTC).
Foreign exchanges sidelined in China
Since September 12, rumors of a new set of Chinese regulations have been circulating on social networks WeChat and Weibo. These concerns were reflected in the price of Bitcoin on September 13, as it attempted to break through the $47,000 level.
The rumors were confirmed on the morning of September 24 with the release of a question and answer session from the People’s Bank of China (PBoC). The document dated September 15 3 regulatory objectives related to digital assets that are detailed in several points:
- Clarify the key attributes of digital currencies and related business activities;
- Establish a robust working mechanism to address the risk of speculation in digital currency trading;
- Strengthen monitoring and early detection of speculation risk in digital currency trading.
After reiterating that Bitcoin (BTC), Ethereum (ETH) and Tether (USDT) are not legal tender in China, the PBoC has issued a new set of bans. According to the publication, business activities related to digital currencies, such as providing trading services and providing information services related to digital assets, are illegal. The same applies to all activities related to the issuance of digital assets and the financing of projects through digital assets. Failure to comply with these prohibitions may result in criminal liability for individuals and corporate officers.
Finally, foreign exchanges are strictly prohibited from offering their services to Chinese residents. The provision of digital asset trading services by foreign entities is now qualified as “illegal financial activity”. This treatment will particularly affect the OTC services still available on Huobi, OKEx and Binance.
Bitcoin plunges in reaction to Chinese FUD
Bitcoin’s price dropped by about $3,000 after the PBoC’s statement was released, which follows the May 2021 crackdown on mining activities. Indeed, BTC was attempting to break through resistance between 9 and 11 a.m., but was violently rejected.
Simply another warmed-over iteration of what has come to be known as “Chinese FUD,” a near-traditional cycle event, so much so that China blames Bitcoin every 6 weeks, or a symptom of a deeper movement? From a sudden rebound to a bearish continuation, the next few days should set the tone, even if the mood this week is grim with JP Morgan explaining that the Ethereum (ETH) price is currently overvalued.