The Bitcoin price succumbed to heavy selling as the Chinese government doubled down on its commitment to outlaw cryptocurrencies. Bitcoin (BTC) dropped 7% from $45,000 to $42,300 following the People’s Bank of China website announcement, which said all crypto-related activities are forbidden.
Of course, this isn’t the first time the nation has cracked down on digital currencies. However, it is the strongest rhetoric we’ve seen from the PBOC since their initial shot at Bitcoin miners sent the markets tumbling earlier this year. In April, China set its sights on Bitcoin’s carbon footprint, banning the country’s energy-intensive mining operations that are often coal-powered. Again today’s announcement cited energy efficiency as the reason for the clampdown. China’s economic planning agency said it’s an “urgent task for China to root out crypto mining, and the crackdown is important to meet carbon goals.” This follows yesterday’s announcement the nation promised to stop building coal-fired power projects abroad.
BTC Price Reacts Badly
As expected, the Bitcoin price fell off a cliff following the news, dropping for an hour straight before finding a bid. Considering the gravity of the report, BTC is holding up pretty well. Furthermore, at $42,300, Bitcoin is the same price as on Monday. Not forgetting the price is still 7% higher than Tuesday’s $39,600 low. This could be a case of the law of diminishing returns working in reality. Maybe Bitcoin holders have already come to terms with the fact China is not a fan and have become less sensitive to the FUD (Fear, Uncertainty, and Doubt) the headlines generate.
However, it’s still early in the day, and historically the weekends have produced some significant moves. On that basis, we can’t rule out further price weakness. However, As long as the Bitcoin price stays above $39,600, the bulls should consider that a sign of resilience. However, if BTC slips below $39,600, an argument can be made for a return to the July lows around $30,000.
Bitcoin Price Chart (15-Minute)
For more market insights, follow Elliott on Twitter.