China's crackdown on bitcoin mining in earlier this year preceded one of the most devastating price crashes in the cryptocurrency’s history.
From an all-time high above $64,000, BTC fell to below $30,000 in a matter of weeks, with some industry figures predicting a “crypto winter” that would take years to recover from.
A mass mining migration to the US, combined with other positive news like El Salvador’s Bitcoin Law, ultimately sparked a record-breaking recovery, and now speculation that China could reverse its decision has led to experts updating their forecasts. Should such a move occur, some claim it could provide the catalyst for yet another massive price rally.
China’s National Development and Reform Commission (NDRC) announced last week that it is seeking public feedback on its decision to include bitcoin mining on its list of “phased-out” industries, with some claiming that it comes as a reaction to the cryptocurrency’s sky-rocketing price and the US’s new-found dominance in the space.
This public comment period will last until 21 November, at which time the country’s macroeconomic planning agency will evaluate the feedback and make a decision on its stance going forward.
“China unbanning bitcoin mining would be big news for the crypto space,” Nick Spanos, co-founder of Zap Protocol and one of the earliest bitcoin pioneers, told The Independent. “It would almost certainly act as a significant catalyst for bitcoin’s price and the crypto market as a whole.
“It has been speculated that China has repeatedly banned bitcoin to deliberately lower its price so it can purchase more BTC on the cheap, so I wouldn’t be surprised to see Beijing completely reverse their stance on crypto.”
While pro-crypto publications like Coin Telegraph described the news as hopeful, claiming that the NDRC could reverse Chinese authorities’ negative stance against bitcoin, more mainstream outlets in the region warned it could actually make things worse. The South China Morning Post described the action as potentially signalling “the final nail in the coffin of cryptocurrency mining activities in China”.
Crypto mining was initially placed in the elimination category by the agency in September, alongside a ban from the People’s Bank of China to block cryptocurrency trading and financing. These services were already inaccessible to Chinese residents, and since July, data from the Cambridge Bitcoin Electricity Consumption Index (CBECI) shows that mining activity in China had already effectively dropped to zero.
This means there are no further moves China can make to further strengthen its stance against bitcoin, with some analysts suggesting that any market-moving news from China can now only go in one direction. Ultimately, China’s decision to remove itself from the crypto space means it no longer has a significant impact on market movements.
“The China crypto story recycles itself regularly,” said Charlie Barton, a UK-based crypto specialist at the price comparison site Finder.com.
“China has banned and unbanned crypto in some way, shape of form pretty much every year since 2014. China is one of the largest cryptocurrency markets, and, due to its political structure, the most likely to make a dramatic ruling when it comes to regulating or banning cryptocurrencies.
“While it’s tempting to believe the seemingly logical narrative that removing restrictions on crypto in the second largest market must be a good thing, ultimately there’s rarely a single narrative that can be pulled out to explain market movements.”
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