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If there's one cryptocurrency that everyone is always talking about, it's Bitcoin. What's the buzz now? The price of a Bitcoin is hovering around the US$30,000 mark for the first time in five months because of China's crypto crackdown. Earlier last week, the world's largest cryptocurrency witnessed a dip of about 6.4% to US$29,614. China didn't just impact Bitcoin, but also the rest of the cryptocurrency market with Ethereum down by 10%, Dogecoin by 25%, and other altcoins like XRP and Litecoin also down by 10%.
On June 21, Bitcoin witnessed a 10% decline, its largest one-day drop in over a month. This was the result of a massive sell-off initiated by the People's Bank of China when it urged China's local banks and payment firms to tighten their rules on cryptocurrency trading. As a result of this, restrictions in Beijing are being tightened.
China's decision to ban cryptocurrencies in 2021 was not a surprise for locals. In fact, crypto exchanges were pushed out of business in China in 2017 owing to a rule change. But that encouraged over-the-counter platforms based overseas to receive payments from Chinese citizens and act as exchanges. Hence, China's sparked the action to cut off all actions pertaining to cryptocurrencies.
The former CEO of BTC China, China's first Bitcoin exchange explained China's intention. Now leading the cryptocurrency wallet app Ballet, Bobby Lee said, "It basically says now OTC transactions are not legitimate. We are not allowed by the banks to transfer money from cryptocurrency purchases and sales."
The Chinese frustration with cryptocurrencies has made Bitcoin lose more than half of its peak value. Bitcoin reached its all-time high price of US$65,000 in April, which is now trading at half that value. Ethereum also hit its all-time lowest value in a month, US$1,773.
China has also pulled the plug on Bitcoin mining and the impact is evident. The hash rate, a measure of how much power Bitcoin mining is consuming has seen a steep decline, touching its lowest level since 2020.
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