July 5, 2021

Bitcoin Plunges Below $32,500 After News from China

Few days after Bitcoin, the premier cryptocurrency hit $40k for the first time in a couple of weeks, enthusiasts and experts hurriedly predicted the foremost coin to hit $45k. The speculations turned out to be knee-jerk as the scuttlebutt we've heard for months of China’s plan to clamp down on crypto transactions came to fruition, causing heavy panic and obviously affecting the price of Bitcoin and altcoins, negatively.

China's third-largest bank, the Agricultural Bank of China has confirmed it will not allow its services to be used for transactions with bitcoin or other cryptocurrencies. Speaking on it, the bank clearly stated that due diligence would be carried out on clients to root out all illegal activities involving the buying or selling of digital currencies.

On Monday, Bitcoin began a rapid decline and collapsed by $2,000 in a few minutes, falling below $32,500. The reason for the collapse, as argued by some, was the statement from the Agricultural Bank of China, which confirmed that it would not allow its services to be used for transactions with Bitcoin or other cryptocurrencies, as duly tweeted by crypto-journalist Colin Wu.

The bank statement stresses that as soon as such activities are detected, the ability to conduct transactions on the account will be immediately suspended, the relationship with the customer will be terminated and the relevant departments will be informed, the journalist further revealed.

Cryptocurrencies, however, fell markedly over the weekend, with authorities in the Chinese city of Yaan informing at least one local mining farm of their decision to shut down all Bitcoin and Ethereum mining farms in their jurisdiction within a year, as reported by Bloomberg. The news, not surprisingly, is further proof of Beijing’s determination to continue its crackdown on cryptocurrencies.

This sudden clamp down on all Bitcoin transactions in the country is coming at a time when Bitcoin and cryptocurrencies, in general, are fighting back the market. Besides the premier coin, altcoins like MATIC, Cardano's ADA, meme coin DOGE, Ethereum, and thousands of others also experienced massive falls in price.

Since the announcement, some of the top mining locations in the country have made moves to halt all activities in the region. With an April 2020 report claiming that China accounts for almost 65% of Bitcoin’s total hash rate, this recent move by the government and People's Bank of China [PBoC] will have greater negative effects on the crypto market in the weeks or months to come.

Like the West African country Nigeria, the PBoC’s unequivocal order to financial institutions to immediately stop all crypto transactions payments, settlement, and clearances will mean only one thing — citizens would have to resort to P2P transactions, a unique feature of a ton of crypto exchanges like Binance, Latoken, Poloniex, etc.

With famous auction house Sotheby set to kick-off a $15 million diamond auction using cryptocurrencies, experts are speculating this sole event could help gain traction and just maybe boost Bitcoin’s current price. While unlikely, we are hopeful.

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Jack Evans

About the author

I became a crypto asset owner in 2014, when the industry was in its infancy. Before that, I was working in the classic US and European stock markets. Since then, I have gained extensive experience in both cryptocurrency investing and day trading. I am happy to share with readers my experience with crypto exchanges, DeFi and NFT instruments. 

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