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Cryptocurrencies Retrace As China Reiterates Its Call For A Crackdown On Bitcoin Mining And Trading

21 May, 2021
Bitcoin mining

Once again, cryptocurrencies are under pressure as China reiterates its call for a crackdown on both Bitcoin mining and trading.

China calls for a crackdown on Bitcoin mining and trading

After a meeting of the Financial Stability and Development Committee on Friday, the State Council said in a statement that it will crack down on Bitcoin mining and trading in order to control financial risks. According to Bloomberg, “China has long expressed displeasure with the anonymity provided by Bitcoin and other crypto tokens”. As a result, Bitcoin retraced below 38,000$.

Chinese officials already issued warnings earlier this week

Earlier the week, Chinese officials already warned investors concerning the use of cryptocurrencies. On Wednesday, the People’s Bank of China (PBOC) released a statement highlighting that “Virtual currency should not and can not be used in the market as money since it’s not a real currency“.

On Tuesday, three Chinese state-backed financial associations jointly issued a warning related to the risks stemming from volatile cryptocurrencies. 

Bitcoin has also suffered from forced liquidations and a possible U.S. tax clampdown

Press articles underlined that forced liquidations have also weighed on Bitcoin price this week. Bloomberg reported that “Bybt data shows liquidations have totaled roughly $10 billion since Wednesday. Outstanding futures contracts have tumbled from a $28 billion peak in April to just $13 billion Thursday.” Lastly, Bloomberg also noted that the U.S. may require crypto transactions of $10,000 or more to be reported to the Internal Revenue Service.