Chesnot/Getty
Bitcoin broke in the New Year in a particularly powerful way: By breaking the $30,000 price barrier for the first time. That was a sign of the good times to come, as by March its price was popping over $60,000. But, as they say, what goes up…
On Tuesday morning, Bitcoin dipped under $30,000 for the first time this year. It followed Monday’s news that China, which has long had a softly enforced ban on cryptocurrency, is getting serious about cracking down on cryptocurrencies. Social media was awash with observers pointing out that 2021’s price gains have for now been neutralized.
The price has since rebounded, to just under $34,000 at the time of writing.
Bitcoin wasn’t alone, however. Ether, the second biggest cryptocurrency, fell to $1,730, its lowest price since the end of March. DogeCoin dipped to 17 cents, under a quarter of its all-time high of 73 cents. Both have also rebounded slightly, with Ether at $1,975 and DogeCoin at 19.8 cents. For reference, Ether’s all-time high is $4,132.
It’s the second slump caused by China’s regulators this year. In May, Chinese officials reaffirmed an old ban that forbids financial firms from actively aiding in the mining and selling of cryptocurrencies. It caused a big dip, but crypto enthusiasts shrugged that the ban is nothing new. It was enshrined in 2013 and then sparsely enforced.
Watch this:
Why cryptocurrency took a hit
3:37
On Monday, however, moves made by China indicated the law would be enforced much more seriously. Key banks and financial services companies like Alipay attended a meeting by China’s central bank, the South China Morning Post reports, where they were told to crack down on cryptocurrency trading. It came days after regional authorities ordered the closure of 26 mining operations in Sichuan.
“Virtual currency transactions and speculative activity have disrupted the normal order of the economy and financial [system],” the central bank said in a statement on its website. “They increase the risks of illegal cross-border transfers of assets and illegal activities such as money laundering. “
The decentralized nature of cryptocurrency is anathema to the Chinese Communist Party’s focus on stability — and control. Though shunning Bitcoin, Ethereum and other cryptocurrencies, China is working on rolling out its very own digital currency, the e-yuan.
China’s #bitcoin ban is short-term negative, long-term positive
— Anthony Scaramucci (@Scaramucci) June 21, 2021
The dominant driver of #Bitcoin right now is the crackdown on mining & trading in China that began in May. This created a forced & rushed exodus of Chinese capital & mining from the Bitcoin network – a tragedy for China and a benefit for the Rest of the World over the long term.
— Michael Saylor (@michael_saylor) June 19, 2021
Bitcoin enthusiasts are comparing the cryptocurrency to Google, whose share price continued to flourish after being banned in the People’s Republic in 2010. They say that China neglects cryptocurrencies at its own peril, and that this will be a long-term positive for the US.
Dogecoin holders are less tranquil. The memecoin entered the year being valued at less than a cent and was pumped by Elon Musk and an ironic internet movement hoping to boost it to 10 cents — similar to the movement trying to get GameStop’s stock to $1,000. The 10-cent target was met in April, and then thoroughly eclipsed in the month that followed. With hype building around a potential announcement from Musk at SNL, the memecoin hit 73 cents. After Musk referred to Dogecoin as “a hustle” on the show, its value plummeted, a trend that’s continued for the past month.