China Tightens Cryptocurrency Crackdown

Posted September 12, 2017

China seems pretty determined to keep Bitcoin from gaining any more traction.

The source further went on to say that this ban is specifically targeted at "unauthorized trading at virtual currency exchanges", and not the blockchain technology itself.

China plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, after banning initial coin offerings last week (See: China bans ICOs in crackdown on cryptocurrency ).

Even before the effect of this news died down, we received the reports of such a ban on exchanges and this led to the crashing of the bitcoin prices back to its lows of the range at the $4000 region.

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China accounts for 23 percent of all Bitcoin trades and houses some of the most successful Bitcoin miners.

"Trading volume would definitely shrink", said Zhou Shuoji, Beijing-based founding partner at FBG Capital, which invests in cryptocurrencies.

While Beijing's motivation for the exchange ban was not clear, according to commentators, it comes as China launches a broad clampdown on financial risk in the run-up to a key Communist Party leadership reshuffle next month. "Old users will definitely still trade, but the entry threshold for new users is now very high".

China was once the world's largest Bitcoin marketplace, accounting for almost 90% of global trading.

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Given that the Chinese government and its financial regulators had not released any abrupt regulations on bitcoin, Ethereum and the cryptocurrency market in general, bitcoin price was on an ideal trajectory towards achieving the interim targets of various prominent financial analysts including Max Keiser, who have altered their short-term price target from $5,000 to $10,000.

Bitcoin has jumped about 600 per cent in USA dollar terms over the past year, part of a broad surge in virtual currencies that has fuelled concerns of a bubble.

Within a period of three days, bitcoin experienced two minor corrections, pulling back the upward momentum and strong rally it had maintained for a few weeks.

"Whenever you start to hear about Hong Kong taxi drivers becoming millionaires from buying bitcoin, you start to think this is not necessarily driven by fundamentals", he said.

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