The world’s largest cryptocurrency rose 3% to $ 32,600, down more than 10% on Monday. Ether, the second largest cryptocurrency, rose 2.8% to $ 1,940 after hitting a five-week low the day before.
The sale on Monday was triggered by an announcement from the People’s Bank of China that summoned China’s largest banks and settlement companies and urged them to crack down on cryptocurrency trading.
“Basically, OTC transactions are said to be illegal … you are not allowed to send money from banks to buy and sell cryptocurrencies,” said Ballet, a cryptocurrency wallet app. Bobby Lee, founder and CEO and former CEO of BTC China, said. China’s first Bitcoin exchange.
The 2017 rule change effectively pushed crypto exchanges out of China, but an overseas-based over-the-counter (OTC) platform was launched to act as an intermediary, paying from people based in China. Received and bought cryptocurrencies on their behalf.
“In essence, this will bring all OTC platforms out of business,” Lee said
Last month, three industry groups, far less influential than the PBOC, announced a similar ban on crypto-related financial services, but banks and payments companies struggle to identify crypto-related payments. Therefore, market participants said it would be difficult to do this.
However, following a PBOC statement on Monday, banks such as the People’s Bank of China and Alipay, a ubiquitous payments platform owned by FinTech giant Ant Group, said they would step up surveillance to eradicate crypto trading.
Price volatility on Tuesday suggested that some Asian-based traders are trying to take advantage of sold-outs.
Matthew Lam, an analyst at OKEx Insights, said data showing a stable flow of coins could indicate a short-term rebound as traders try to buy at the bottom of the market.
Stable coins are digital tokens fixed to other products and currencies, often the US dollar, and are a common midpoint for traders buying cryptocurrencies.
“But without a major catalyst, it is unlikely that a major recovery will occur, let alone a broader trend reversal,” Lam said.
Beijing has rushed to step up its campaign against cryptocurrencies in the past few weeks since China’s State Council announced last month that it would tighten restrictions on Bitcoin trading and mining.
Major Bitcoin mining hubs are beginning to do this, and local authorities such as Sichuan, Xinjiang Urad, and Inner Mongolia have issued their own curbs with details of the restrictions.
As a result, the hash rate, which measures the processing power of the Bitcoin network and indicates how much mining is taking place, reached its lowest level since late 2020 on Monday.
In the short term, broader crackdowns are also affecting prices.
Seth Melamedo, Chief Operating Officer of Tokyo-based cryptocurrency exchange Liquid, said: ..
But he believes this is just a “temporary radar blip,” as “the mines closed in China will be backfilled by miners in Iceland and Kazakhstan.”