According to Bloomberg reports over the weekend, Bitcoin mining operations in China will be put an end to in the coming months by the current government. The world’s biggest digital currency could face a massive impact from this move. China has been a central player in the development of Bitcoin in the recent years but was also one of the most important markets to impose strict rules related to Bitcoin and cryptocurrencies, which include shutting down local exchanges and banning initial coin offerings. It now looks like China may have helped decimate Bitcoin altogether, and the country seems pretty happy with itself.
According to leaked documents, the Chinese government is now pursuing an “orderly exit” for bitcoin mining operations in the coming months. Chinese-language site Xinhua issued a report as well pointing to new data from China’s central bank about the country’s actions regarding cryptocurrencies. Bitcoin trading in Chinese fiat (renminbi or RMB) has fallen to less than 1% of the world total, a decline from a peak of more than 90%, according to the bank.
Regulation issues and exchange crackdowns aren’t the only explanations for the continued downturn for crypto coins. A new potential reason to have emerged for Bitcoin’s highs and lows is market manipulation, although it’ll take some time for these allegations to be satisfactorily proven.
Direct trading between RMB and virtual currency were banned by China initially. The bank says that the country has ensured a “zero-risk exit” for 88 exchanges and 85 ICOs. While some exchanges and ICOs have indeed managed to relocate to other crypto-friendly countries and continue their business, not being able to trade fiat for crypto-tokens has been a massive blow to most local Chinese traders. Local mining endeavors have also had to take a toll in the process.
However, despite the bad situation in China, Bitcoin prices continued to climb, going to almost $20,000 in late December. But the bank’s report suggests that the Chinese bans on cryptocurrencies may have had a longer lasting effect than initially speculated. In under a year, the Chinese government managed to significantly reduce Bitcoin trading in the country and therefore around the world as well, which is sure to have had an impact on the entirety of the crypto market.
While the Bitcoin is currently at well above its recent lows ($6400 at the time of writing), one thing that can be said with certainty about the crypto market is that massive price fluctuations can occur absolutely any time.