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Besides digital currencies that are currency plunging in today’s trading sessions, cryptocurrency-related stocks are also taking the heat.
Renewed interest to clampdown on the cryptocurrency industry by the People’s Bank of China (PBoC) has sent the prices of digital assets tumbling, scaring the prior recoveries picked by coins following the aftermath of the China Evergrande liquidity crisis. The PBoC has yet again proscribed all cryptocurrency-related activities as illegal. Infact, the apex bank has broadened its definition of unpermitted actions to include trade offerings, order matching, token issuance, and derivatives for virtual currencies.
The new emphasis by the PBoC was posted on the bank’s website as an FAQ, and effectively, foreign trading platforms are also notably not permitted to operate in the country. “Overseas virtual currency exchanges that use the internet to offer services to domestic residents are also considered illegal financial activity,” the PBoC declared in one of the FAQ sections.
A very unprecedented market dip was ushered in back in the second quarter of the year when the PBoC issued a quit notice to Bitcoin miners operating in the country. The clampdown effectively demoted China as the main hub for Bitcoin’s hashrate, and the entire industry is still hoping to regain lost prices as many coins were dragged off from their All-Time High (ATH) with the unfavorable regulation at the time.
Per the latest Chinese stance on cryptocurrency-related activities, the combined crypto market cap has plunged by 5.57% to $1.84 trillion. The loss was spearheaded by Bitcoin which is currently changing hands at $41,560.40, down 4.44% according to data from CoinMarketCap. Ethereum (ETH), and Binance Coin (BNB) were down 7.48% and 6.57% with Cardano (ADA) amongst the few coins yet to feel the weight of the impending clampdown. At the time of writing, Cardano is trading at $2.27, atop a 3.47% in the past 24 hours.
China Cryptocurrency Clampdown: Impact Spreading Across the Board
Besides digital currencies that are currency plunging in today’s trading sessions, cryptocurrency-related stocks are also taking the heat. While Coinbase Global Inc (NASDAQ: COIN) is down 3.81% in the pre-market at $ 228.45 per share, Argo Blockchain PLC (LON: ARB) has also shed off 12.76% of its price valuation to be changing hands at GBX123.88.
“The Chinese regulators have always been extreme in their views and these comments are not new,” said Vijay Ayyar, head of Asia Pacific at digital currency exchange Luno. “They have said these things many times in the past. But the reaction is interesting purely because we are anyway in a slightly nervous environment for crypto with the recent SEC comments and overall macro environment with the Evergrande news. So any comments of this nature will cause a sell off in risky assets.”
Despite these sell-offs, Vijay believes that the industry is still on a clear path towards imminent growth surges provided Bitcoin continues to trade above the $40,000 support.
“Overall, we’ve seen this play out many times in the past, with such dips being inorganic and bought up quite quickly especially in environments where crypto is in a bull market cycle. Hence, price action wise, as long as we don’t drop below $38,000 on a high time frame basis, we are still in bullish territory,” he said.