Since Bitcoin’s first year into existence, the Chinese government has hunted down the primary cryptocurrency, banning it after ban citing the countless risks supposedly associated with it.
In more than a decade, the Republic of China has also managed to increase FUD (short for Fear, Uncertainty and Doubt) in the industry, and each time, the cryptocurrency has seen massive success. Just last week, the price of bitcoin fell more than 5% in a matter of hours, due to another repeat of regulation by the Chinese authorities to ban cryptocurrencies.
Before we dive into the long history of Chinese FUD, there is good and bad news to this story. The bad news is that this type of Chinese FUD is likely to continue, at least for the coming years. However, the good news is that the impact on the bitcoin price appears to be diminishing over time, as BTC becomes more and more resistant.
China FUD Vs. Bitcoin
With endless bans and unnecessary frequent threats, one would think that it is a well-coordinated effort to bring down the price of Bitcoin. But this may be a story for another day.
For now, let’s go down memory lane and see all the times China has raised FUD levels in the cryptocurrency market with its endlessly hostile stance and pledges to end crypto activities and how the industry continues to win.
2009 – Cryptocurrency Ban
In June 2009, just a few months after the launch of bitcoin, the Chinese Ministry of Commerce and the Chinese Ministry of Culture banned the use of digital currencies for payments for goods and services in the real world.
However, this move was not explicitly targeting bitcoin, rather it was aimed at curtailing several video game currencies that were supposed to devalue the yuan.
2013 – China explodes after the first major Bitcoin bull run
Four years later, in December 2013, the world’s most populous country made its first direct attack on the use of bitcoin, calling it a “currency without real value.”
The People’s Bank of China (PBoC) and the Ministry of Information Technology have published a memo requiring every Chinese financial institution to stop processing bitcoin transactions.
The impact of this notification was immediate, forcing the price of Bitcoin, which had just crossed the $1k mark, to drop significantly – the first price impact of many.
2014 – Bear market driven by Chinese FUD
After recovering from the 2013 Chinese FUD, the crypto industry was once again hit by another devastating report that “the PBoC has imposed a total ban on Bitcoin transactions.”
While this news, published in March 2014 by Weibo, turned out to be false, its impact on the market was disastrous. Thousands of traders and investors liquidated their positions, and the price of Bitcoin plummeted. BTC, which was trading above the $1k mark at the end of 2013, was heading towards $400 just three months later.
2017 – Exchanges forced to leave China
2017 will always be an unforgettable year in cryptocurrency history. It was the first time bitcoin hit $20,000 in December, however, it has suffered more from the Chinese government’s FUD than in previous years.
In mid-2017, the People’s Bank of China (PBoC) threw two regulatory bombs in the same month. The first ban was on Initial Coin Offerings (ICOs), which were popular at the time. The second was targeting cryptocurrency exchanges.
The authorities insisted that all ICOs actively taking place in the country should be stopped immediately, noting that they were illegal forms of public funding and were not authorized by China’s financial regulators.
By mid-September, the PBoC reached the crypto market with another ban notice. Every cryptocurrency exchange operates in the country commissioned Cessation of its services by the end of September 2017, citing the risks of its use in facilitating criminal activities such as drug trafficking, money laundering and smuggling.
Several major cryptocurrency exchanges, including Binance – which was operating out of China at the time, had no other choice but to relocate, and cryptocurrency traders across the country were forced to move their trading activities to third-party platforms via VPNs.
Leading cryptocurrency prices suffered. But as always, the market recovered within three months, and it turned out to be a breaking point for cryptocurrencies around the world as BTC reached an all-time high (ATH) of $20,000 in December 2017.
2018 – Mining targeting
In early 2018, Bitcoin suffered the largest price crash in history. Shortly after 2017 ended at a high of $20,000, the value of the underlying digital asset fell more than 65% against the US dollar around February of that year.
Although there was no solid reason for the drop, several reports indicated that the drop was closely linked to the Chinese New Year and rumors of a fresh crackdown on crypto-mining.
In August 2018, it was reported that China export Another document that officially bans all crypto activity in the region. The paper focused on communication channels as it prohibits commercial venues such as WeChat accounts, media outlets, and others from hosting any crypto-related events or activities.
2019 – Bitcoin Mining Ban Confirmed
Rumors of a large-scale crackdown on bitcoin mining were confirmed in April 2019, when a draft warning from the country’s National Development and Reform Commission (NDRC) indicated that the regulator was planning to crack down on such activities in China.
The draft argued that bitcoin mining does not comply with relevant applicable laws and regulations and pollutes the environment. Once again, the price of BTC has dropped dramatically.
2020 – Power plants ordered to cut power to miners
With the onset of the COVID-19 pandemic, many Chinese miners liquidated their crypto holdings, leading to a massive bloodbath in March that saw Bitcoin and almost all digital currencies lose more than 50% of their value.
Despite the global pandemic, in May 2020, local government authorities in the Chinese province of Sichuan sought to ban cryptocurrency mining operations in the region.
In October, the market was hit again by the ban on cryptocurrency trading. Violators were threatened with fines equivalent to five times the value of their crypto money.
In December, power plants in Yunnan Province, where many of China’s largest mining centers are located, received mandates from local authorities to stop providing power to the city’s miners. This led to a sharp drop in the Bitcoin hash rate.
However, Bitcoin managed to break the $20,000 mark and end 2020 with a new ATH over $30,000. Retail also recovered fairly quickly.
2021 – Miners leave China: Crypto ‘Illegal’
2021 has begun for the bitcoin and crypto market in general. After ending the previous year with a rally of 30,000, BTC continued to chart new records until it peaked at around $65,000 in mid-April.
However, things quickly turned dark for cryptocurrency traders as the Chinese government embarked on a nationwide crackdown on crypto mining and trading. It renewed its warnings to citizens for the twentieth time about the risks associated with investing in such “speculative” assets.
Although every financial service provider and payment gateway in the country has already been banned from working with crypto entities since 2013, the news resurfaced in May 2021 and sent the cryptocurrency market down a hill. Bitcoin has lost nearly half of its value in weeks.
Over the past four months, China has intensified its war against cryptocurrency activities like never before. In June, officials repeated the ban on bitcoin mining (again) and cracked down on bitcoin mining facilities, forcing miners to shut down their machines.
The tightening of such operations has not only impacted many key metrics on the chain and caused prices to drop, but it has also led to the continuation of the major Chinese mining exodus, as miners in the region begin to move to other crypto-friendly locations.
In July, another report emerged that the PBoC had shut down a technology company that allegedly provided software services to local crypto entities. The price of Bitcoin immediately fell as soon as the news came out.
In August, China hunted down crypto-influencers, and the government shut down the website and social media handles of the country’s top blockchain hub.
On September 24, the market took another hit as the People’s Bank of China (PBoC) declared all crypto-related transactions in the country illegal. Although the news came from September 3rd, it did not prevent the bitcoin price from ripping $4,000 in a matter of hours, causing massive liquidations.
Verdict: Bitcoin always wins
Over the past years, the Chinese authorities have often tried to bully Bitcoin and force it out of existence, but all their efforts – so far – have always proven to be unsuccessful. The cryptocurrency industry continues to thrive as the market usually recovers from any blows it receives from the Asian giant.
Bitcoin has retained its position as the largest cryptocurrency, with the influx of large institutional investors fueling its adoption rates.
Judging from the patterns of past cases caused by the Chinese government, Bitcoin often goes through a massive uptrend within a few months after suffering the effects of the same old regulatory song from China.
Will China’s latest attack spur Bitcoin to another ATH? Only time will prove it.
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