China Bans Bitcoin & Crypto Again. Is it Cause for FUD?
It’s happening! China bans Bitcoin (BTC) again! But wait, hasn’t this happened before? Over the last 10 years, Bitcoin has found itself on the wrong side of China’s different crypto bans. Since 2013, China has been attempting to ban BTC and all related crypto activity. However, this most recent ban stands out because the government has never outright forbidden their citizens from holding BTC—that is until this year.
What happened? Did China ban Bitcoin?
So, is Bitcoin banned in China? On September 24, 2021, the People’s Bank of China (PBOC) announced on its website that all crypto-related transactions would be considered “illegal financial activities.” The PBOC said their reason for shutting down BTC in one of the largest crypto markets is that virtual currencies “seriously [endanger] the safety of people’s assets.”
No matter what the reason is, there is a significant relationship between feelings of FUD (fear, uncertainty, and doubt), Bitcoin’s price, and China’s increasing crypto bans. But before we get into the nitty-gritty around FUD and BTC prices, let’s discuss China’s rocky relationship with Bitcoin and why China banned cryptocurrency.
A timeline of China’s BTC Bans
While most of the previous restrictions were smaller and gradual, China’s most recent ban is the strictest regulation so far. Here’s a brief timeline of China’s cryptocurrency news:
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- China bans any banks from working with or handling BTC transactions. It refuses to call it a legal tender and categorizes crypto as a virtual good instead.
- Meanwhile, China’s largest crypto exchange complies under government pressure and stops taking any yuan deposits.
- This triggers FUD and a drop in BTC prices soon follows. On November 30th, BTC was over $1,100. Then it dropped to $559 on December 18th.
Fall and Winter 2017
- China’s next ban was on initial coin offerings (ICOs). This was a big deal at the time since ICOs were growing in popularity.
- China announces they are investigating market manipulation and money laundering in relation to Bitcoin.
- At this point, citizens are maneuvering around the ban by utilizing offshore and peer-to-peer (P2P) exchanges.
- BTC prices then fell greatly in the midst of these laws and investigations. The price went from 4,200 USD on September 9 to 3,100 USD on September 14. Three months later, however, Bitcoin bounced back to an all-time high of over 19,000 USD at the time.
- In April 2019, China’s National Development and Reform Commission (NDRC) said that Bitcoin mining is “undesirable.”
- At this point, over the last several months, China has been contemplating whether to ban crypto mining but decides not to act.
- Fast forward around 18 months after, China decides to act on crypto mining and starts cracking down on it.
- It points to Bitcoin mining’s supposed high energy usage and how it may threaten China’s environmental goals.
- At this point, the Bitcoin economy greatly declined as 50% of all mining activity came from China.
- In September 2021, the big question came: Will China ban cryptocurrency? In a nutshell, the Chinese government put all speculation aside and banned Bitcoin for good.
- In the past, there was piecemeal legislation that made China’s crypto ban unclear. Now, PBOC, with nine other state bodies, including the Supreme Court, have made things obvious.
- This regulation not only includes Bitcoin but also any crypto transactions, including Ethereum (ETH) and Tether (USDT).
- There was a great deal of FUD and BTC dipped in price three times in 2021—particularly in May, July, and September.
- By October 2021, Bitcoin appears to be recovering from the latest ban in China. It went from $33,000 to over $60,000.
What does China’s BTC ban mean for you?
China’s crypto ban could mean plenty of things for the geopolitical and economic world. Given China’s economic presence, these bans tend to make headlines and cause a lot of FUD. Consequently, this causes a lot of crypto enthusiasts to sell and leads to a dip in prices.
But is this cycle a self-fulfilling prophecy? Is there a way to break out of this cycle of fear, uncertainty, and doubt? The answer to the first question seems to be clear-cut. With the bans, it’s likely that FUD and chaos will be generated—and from there, BTC prices could drop.
Moving past the ban
Perhaps instead of trying to fight FUD, another answer is to just embrace it. An option that many enthusiasts are leaning towards is to think of the dip as an opportunity to buy Bitcoin for cheap. Bitcoin seemingly always bounced back after the dip that follows headlines about China’s crypto ban. It could be a good idea to think of a dip like a little sale. Time and time again, we’ve seen that despite reports of China’s bans on BTC, this coin can and will bounce back. We all just need a little faith.
As China bans crypto, it’s important for all crypto enthusiasts to keep moving forward. Regardless of any FUD circulating, don’t let it get to you. Remember, be logical when it comes to buying BTC, and remember that history is on our side. No matter what happens in China, BTC is stronger than it appears.