China has continued to forbid cryptocurrencies for more than ten years, but has still not understood that bitcoin always wins.
The Chinese government has targeted bitcoin since the very first year it was created, slapping it with restriction after prohibition and alleging myriad threats it is alleged to be related with.
FUD (short for fear, uncertainty, and doubt) has increased in the sector over the past ten years, and each time, cryptocurrency has taken a significant knock. Just last week, the Chinese government reiterated its regulatory decision to outlaw cryptocurrencies, which caused the price of bitcoin to drop by more than 5% in a matter of hours.
There is both good news and bad news to this narrative before we get into the lengthy history of China FUD. The bad news is that this Chinese FUD is probably going to persist, at least for the foreseeable future. The good news is that, as BTC grows more resilient, the impact on the price of Bitcoin appears to be fading over time.
FUD from China vs. Bitcoin
One would assume there is a well-coordinated campaign to drive down the price of bitcoin given the never-ending restrictions and pointless repeating warnings. But perhaps that is a tale for another day.
For the time being, let’s take a look back at all the times China has increased the amount of FUD in the cryptocurrency market through its persistent hostility and promises to put a stop to crypto activities, as well as how the sector has continued to thrive.
2009 – Ban on Digital Currencies
Just a few months after bitcoin’s introduction, in June 2009, China’s Ministry of Culture and Ministry of Commerce outlawed the use of virtual money to pay for tangible goods and services.
The action, however, was taken to stop multiple video game currencies from allegedly weakening the yuan rather than specifically targeting bitcoin.
2013 – China Pops Following Bitcoin’s First Major Bull-ru
The most populous country in the world launched its first outright criticism of bitcoin use four years later, in December 2013, calling it “a money without actual value.”
Every Chinese financial institution is required by a letter released by the People’s Bank of China (PBoC) and the IT Ministry to stop processing bitcoin transactions.
The price of bitcoin, which had just passed the $1000 mark, immediately fell dramatically as a result of that message, marking the first of many price impacts that to come.
2014 – The Bear Market Driven by China FUD
After recovering from the 2013 China FUD, the cryptocurrency sector was once more devastated by the news that the “PBoC has outright banned Bitcoin transactions.”
Even if the Weibo report from March 2014 turned out to be erroneous, the market reaction was disastrous. Bitcoin’s price fell after thousands of traders and investors sold off their holdings. By the end of 2013, BTC was trading above the $1k mark, and only three months later, it was headed toward $400.
2017 – Exchanges Forced to Leave China
The year 2017 will always stand out in the annals of cryptocurrency. Even when bitcoin reached $20,000 for the first time in December, the Chinese authorities spread more disinformation about it than in prior years.
The PBoC detonated two regulatory bombs in the same month in the middle of 2017. Initial Coin Offerings (ICOs), which were popular at the time, were the subject of the first prohibition. The second was directed at exchangers for cryptocurrencies.
The government asked that all currently operating ICOs be stopped immediately, claiming that they were unlicensed public fundraising methods and had not been approved by China’s financial regulators.
Midway through September, the PBoC announced another another embargo on the cryptocurrency market. The government ordered every cryptocurrency exchange in the nation to stop functioning by the end of September 2017 due to the possibility that they may be used to support illegal operations including drug trafficking, money laundering, and smuggling.
Many prominent cryptocurrency exchanges, like Binance, which was based in China at the time, were forced to relocate, and cryptocurrency traders all around the nation were forced to transfer their trading activity to foreign platforms using VPNs.
The major cryptocurrencies’ prices dropped. But as usual, the market bounced back within three months. In fact, BTC’s December 2017 all-time high (ATH) of $20,000 proved to be a turning point for cryptocurrency globally.
2018 – Targeting Mining
Bitcoin saw one of its worst price falls ever at the beginning of 2018. The value of the main digital asset collapsed by more than 65% against the USD in February of that year, just after reaching highs of $20,000 at the end of 2017.
Several stories stated that the decrease was directly related to the Chinese New Year and speculations of a new crackdown on cryptocurrency mining, even though there was no clear cause for the decline.
China allegedly published a new document in August 2018 that forcibly outlawed any crypto activity in the area. The article concentrated on communication channels as it forbade any media outlets, business WeChat accounts, or other spaces from conducting any events or activities relating to cryptocurrencies.
2019 – Bitcoin Mining Ban Confirmed
The National Development and Reform Commission (NDRC) of China stated in a draft warning that the regulator intended to ban these operations in the nation in April 2019, confirming rumors of a harsh crackdown on bitcoin mining.
According to the proposal, bitcoin mining damaged the environment and violated pertinent laws and regulations. BTC’s price fell dramatically once more.
2020 – Power Stations Ordered to Halt Power to Miners
A number of Chinese miners sold up their cryptocurrency holdings at the start of the COVID-19 Pandemic, which led to the catastrophic slaughter in March during which bitcoin and nearly all altcoins lost more than 50% of their value.
In May 2020, local government officials in the Chinese province of Sichuan sought to outlaw cryptocurrency mining activities there despite the worldwide epidemic.
A new prohibition on crypto trading hit the market in October. Fines five times the amount of the offender’s cryptocurrency funds were implied as a possible punishment.
The Yunnan province, home to several of China’s greatest crypto mining centers, issued orders to its power plants in December to stop supplying electricity to the city’s miners. As a result, the hash rate for bitcoin fell precipitously.
Nevertheless, bitcoin managed to surpass $20,000 and close 2020 with a new ATH of more than $30,000. Additionally, the hashrate rebounded rather quickly.
2021 – Miners Leave China: Crypto is ‘Illegal’
The year 2021 began with bitcoin and the overall cryptocurrency sector. BTC continued to set new milestones after completing the previous year with a high of 30,000 until it reached a top of almost $65,000 in mid-April.
However, when the Chinese government launched a statewide campaign against cryptocurrency mining and trading, things swiftly turned gloomy for cryptocurrency dealers. For the 20th time, it warned residents again about the dangers of investing in such “speculative” assets.
The rumor emerged in May 2021 and sent the cryptocurrency market spiraling down the mountain, despite the fact that every financial service provider and payment gateway in the nation has been been forbidden from cooperating with crypto businesses since 2013. In a few of weeks, Bitcoin’s value fell by over half.
China has up its assault against cryptocurrency activity more than ever in the recent four months. Officials reaffirmed the prohibition on bitcoin mining in June and launched a huge crackdown on bitcoin mining operations, requiring miners to turn down their equipment.
The crackdown on such operations not only had a negative impact on pricing and other important on-chain indicators, but it also sparked the still-current Great China Mining Migration as miners in the area began to move to other crypto-friendly regions.
Another story claiming the PBoC closed down a tech company purportedly offering software services to regional bitcoin businesses surfaced in July. As soon as the news surfaced, the price of bitcoin quickly decreased.
China targeted cryptocurrency influencers in August, and the nation’s prominent blockchain hub’s website and social media accounts were taken down by the administration.
The market suffered another setback on September 24 as the PBoC allegedly said that all cryptocurrency-related transactions in the nation are prohibited. Despite the fact that the news was from September 3, it could not prevent bitcoin’s price from falling by $4,000 in a matter of hours, leading to large liquidations.
Conclusion: Bitcoin Always Wins
The Chinese government has attempted repeatedly over the last several years to intimidate bitcoin and drive it out of business, but all of these efforts have so far been ineffective. The cryptocurrency business is still thriving since the sector often bounces back from any setbacks caused by the enormous Asian country.
Due to a surge in big institutional investors, Bitcoin has maintained its dominance as the most popular cryptocurrency.
According to the trends of prior cases brought on by the Chinese government, bitcoin frequently experiences a significant bull run within a few months of being affected by the same old Chinese regulatory measures.
Will the most recent onslaught from China push bitcoin to another all-time high? Time will only tell.