Bitcoin drops below US$40,000; China sends another crypto warning | The Daily Forkast
China’s newest warning against crypto sends market into nosedive and Bitcoin dips below US$40,000 for the first time since February.
The crypto market nosedives as Bitcoin dips below US$40,000 for the first time since February 8 — the day when Tesla’s US$1.5 billion Bitcoin purchase was made public.
The market plunge follows the newest warning to crypto trading in China, reminding banks and online platforms cannot provide crypto services.
Inner Mongolia banned cryptocurrency mining earlier this year. Now, it’s setting up a reporting platform to catch miners that aren’t following the rules.
We’ll have more on that story — and other news shaping the cryptocurrency and blockchain world — in this episode of The Daily Forkast, May 19.
Welcome to the Daily Forkast, May 19th, 2021. I'm Angie Lau, Editor-in-Chief of Forkast.News. Let's get you up to speed from Asia to the world.
Asia leading a crypto market correction as many key coins take a nosedive today during Asian trading hours. Bitcoin dropping below US$40,000 for the first time since February 8th — when Tesla US$1.5 billion Bitcoin purchase hit the airwaves. It's closing at just over US$40,000 at the end of the Hong Kong trading day, 4:00 pm local time, Ethereum down a little over 14%, closing below US$3,000.
And a similar scene across the top ten in crypto. Cardano and BnB — some of the day's biggest losers, but not alone in today's bloody Wednesday.
So let's get some context. What is behind all of this? John de Wet is chief investment officer of Zerocap, a digital asset firm in Australia. He believes these bearish market moves are hype-driven.
"Look, I think it's a natural function of the market that's really been engulfed in a lot of hype lately. You know, when you've got Dogecoin pumping through highs and meme coins coming out left, right and center, there has to be a bit of an exit valve. And unfortunately, you do tend to get that filtrating into the rest of the market.
In China, this news also weighing on sentiment. China is sending another warning to those who invest in cryptocurrencies against speculative trading. The country also reiterating that banks and online payment platforms can not provide services related to cryptocurrency transactions.
Semi-government-sponsored groups representing the industry, including the China Internet Finance Association, issued a statement saying in part that internet platform corporate members should not provide services for virtual currency-related businesses. "If clues or related problems are found, they shall promptly report to relevant departments and provide technical support for related investigations and assistance."
So how to read into all of this? Well, Forkast spoke to China-based industry veterans. Fan Long, co-founder of Conflux, a public blockchain endorsed by the Shanghai government, says warnings like these are not new from the government and that they shouldn't stoke fear.
"The Chinese government is saying with its consistent message that they are not very happy about the highly speculative nature of this cryptocurrency or crypto market. And it's also kind of consistent with what the Chinese government keeps doing, which is that on one hand, they are not very happy about the speculative nature of this technology — the blockchain, the crypto market. And on the other hand, the Chinese government is really ready to invest in the blockchain technology."
This is right. China's stance on cryptocurrency is one thing, but when it comes to embracing blockchain technology, it's full steam ahead. Just ask public blockchain network Nervos. It announced the launch of a US$50 million fund with China Merchants Bank.
This is a move the company says will boost the development of the public blockchain ecosystem in China. Now nervous is one of the public and permissionless blockchains integrated into the global service offered by China's state-backed Blockchain-based Service Network, or BSN — one of the world's few government-led and government-owned blockchain networks. All this as China continues to expand the applications and pilot trials of its digital yuan to ever more users and payment providers.
Nor does mining appear to be slowing down either, at least not everywhere in the country. New York Stock Exchange-traded SOS Ltd, based in Qingdao, China, reporting the company has put over 6,000 new mining rigs into operation. That includes nearly 600 Ethereum rigs. Now the company's CEO says he expects mining to be an important growth driver of the business for 2021.
This as Inner Mongolia's government, which essentially shut down crypto mining earlier this year in an effort to achieve new carbon reduction goals, has set up reporting platforms for those who might not be following the rules. We wanted to get a better understanding of the real story from inside China. We spoke to Bitdeer Mining's Leo Li, who says harsh rates have shifted outside of China. But he sees the industry is still performing well within the country.
"Over 50% of this hash rate are coming from Chinese money mining farms. So such a ban in China, in Inner Mongolia won't have a big effect in China's mining farms.
"Live by the sword, die by the sword," as they say. A sell-off for one is a buying opportunity for another — in mining, in Bitcoin and everything else.
And that's The Daily Forkast from our vantage point right here in Asia. For more, visit Forkast.News. I'm Editor-in-Chief Angie Lau. Until the next time.