China and taiwan crypto crackdown displays global unease along with asset classSeptember 30, 2021
Digital currencies sold off after China’s central bank said all cryptocurrency-related transactions were illegal, according to a Q&A statement on the People’s Bank of China’s website. Bitcoin, the largest digital coin, fell as much as 8.9%, while Ether lost near 13%. The Bloomberg Galaxy Crypto Index, a gauge of some of the most-prominent cryptos, lost as much as 11%.
“It’s the latest move in a multi-year clampdown on Bitcoin and cryptocurrencies,” said Antoni Trenchev, managing partner and co-founder of Nexo, a crypto lender. “For now, Bitcoin can’t catch a break. Bitcoin is being bombarded from all sides.”
Here’s how market-watchers reacted:
Chen Arad, chief operating officer at crypto risk surveillance firm Solidus Labs:
“Though China’s move is particularly dramatic, it reflects on similar concerns regulators globally are sharing surrounding crypto market integrity and its role in illicit activity. Manipulation and fraud is not unique to crypto but, as a new asset class, digital assets present new challenges and have more to prove to regulators and the public.”
Brent Donnelly, president of Spectra Markets, and a former HSBC FX trader:
“Solana Summer is over, the Loot frenzy looks like a major peak for NFT (non-fungible token) mania, the El Salvador launch on September 7 was the ding dong high for BTC (predictably),” he wrote. “It will be interesting to see how crypto trades in Q4 in the face of reduced global monetary accommodation and a lack of fun stories. My guess is that crypto struggles for a while.”
Steven McClurg, chief investment officer at crypto fund-manager Valkyrie Investments:
“China has banned crypto at least a dozen times this year. The volatility we are seeing today may be a knee-jerk reaction by some, but most market participants have already priced a China ban in from the beginning of the summer.”
Chris Dick, a London-based quant trader at crypto trading firm B2C2:
“If the headlines are just stronger wording ahead of China’s own digital currency, or if China is just reiterating it’s stance on mining, then there is no lasting effect here,” he said. “If, on the other hand, the crackdown affects key market infrastructure such as the major exchanges then the market volatility is set to increase further.”
George Monaghan, analyst at GlobalData’s thematic team:
“China ruling crypto transactions illegal would be disastrous for the cryptocurrency sector. Being excluded from the world’s largest market is terrible for any product, and this is the strongest demonstration yet of China’s anti-crypto sentiment,” Monaghan said. “However, this isn’t the first time China has threatened action, and, thus far, it has failed to follow through. The next few weeks will be rough for crypto markets that were already on edge after the SEC’s recent comments, but only actual legislation will have a long-term effect.”
Alex Tapscott, managing director of the digital asset group at Ninepoint Partners:
“Veteran traders are conditioned to shrug off bad news from China and buy the dip, but could this time be different? There are a few reasons to think so,” including China’s tech crackdown, as well as its pursuit of its digital yuan, among other factors.