In about 48 hours, the crypto market made an impressive return after the new China ban on crypto mining and trading. The latest release of regulatory calls on crypto transactions by the People’s Bank of China (PBoC) made the market experienced a downward spike. However, there was a quick retracement, unlike before.
Crypto Market Behavior to New China Ban
China’s announcement has always served a deft blow to the crypto market. This announcement tends to make the market ride the downward trend as traders lose some of their crypto investments based on market reaction due to various bans.
This may result from unnecessary agitation—like FOMO—that pushed users and traders to use the “sell” option, which may look profitable. Likewise, some made the “buy” call while witnessing another significant dip after their purchase. Only a few parties tend to HODL during such mixed market emotions. These are possible human behaviors influencing the market and crypto price after every announcement.
However, the latest China announcement doesn’t seem to have a massive impact on the crypto market. That’s because of the market recovery happening in about 24 hours. Despite the new ban, Bitcoin and Ethereum received continuous buying support from the market. That was unusual of market performance due to specific actions from individuals and groups.
The People’s Bank of China (PBoC) announcement emphatically placed a ban on crypto transactions across the country and how it is going to chase after crypto miners and uproot them from the nation.
This new announcement is taking away user’s privilege of maintaining their offshore crypto trading activities. Likewise, the new ban forbids exchange platforms from conducting local recruitment while also leveraging internal marketing to serve the Chinese. As a result, the government’s ban is reducing their extension towards serving Chinese customers.
In between various China bans, miners are leaping to establish their crypto mining process outside of China. It is noteworthy that miners located in China take up about half of the global hash rate.
But the bans around China reduced the hash rate by 50%. However, the quick crypto market recovery indicates that miners are back in operations regardless of where it occurs, either in China or other places. That’s evident because the hash rate was reasonably steady after Friday’s announcement.
Exchanges’ Response to New China Ban
One of the ripple effects of the China clampdown on crypto trading and mining is the quick callback on new registration of Chinese users on various exchanges servicing clients using Chinese phone numbers or details.
An instance is an announcement made by Huobi—a well-known offshore exchange platform—that it will stop new users from registration using China phone numbers from the mainland. This exchange also revealed that it retire accounts using such phone number details by December 31st. Likewise, Binance has decided to move along this thread too.
These two largest exchanges are doing this to comply with the government regulatory policies to protect their citizen’s financial information and keep the economic situation in the proper order. Another service provider for the crypto wallet—TokenPocket—said that it would welcome blockchain technological cooperation from China after it stopped servicing mainland Chinese to abide by the regulations.
In a bid to hold the regulation policy, Alibaba announced that it would disallow manufacturers or suppliers to sell digital currency miners on its platform. This is an effort to support disallowing crypto transactions such as selling Bitcoin, Ethereum, or Litecoin. Alibaba mentioned that October 8 would see the closing of Blockchain Miners or Blockchain Miner Accessories category on its platform.
Amidst all these various China bans, some companies are feeling the heat more than others. This is evident in their stock market performance plummeting. For instance, Huobi’s stock dropped by 22%, and another fintech company, OKG, losing up to 12% of its stock.
Who are the Beneficiaries of China Crypto Ban?
The first China ban announcement had triggered mining and some fintech companies to establish operations outside China. Some had moved to Singapore to establish their headquarters and resume operations from there. An example is Babel Finance. While this is ongoing, companies’ departure doesn’t seem to affect the national economy.
Instead, other financial sectors like decentralized finance (DeFi) and countries like the U.S. may benefit from this migration. This may also cause an increased influx rate into the U.S. regulated exchanges due to the China ban.