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New bans in China: whales out of crypto exchanges

China crypto exchange


Cryptocurrency markets were back on the rise Monday morning in Asia, rebounding quickly following China’s announcements on Friday banning cryptocurrency trading and mining and the news that several crypto exchanges would stop registering new accounts and close existing accounts in mainland China by December 31.

The whales’ move from crypto exchanges to wallets after China’s decisions

According to CoinMarketCap‘s data, Bitcoin fell to $40,936 after the events, but then rebounded about 7% to nearly $44k. The same trend was also recorded for Ethereum which returned to the price of $3,100 after seeing a drop in its value of 2.81%.

The weekend was marked by the transfers, which began on September 26 at around 03:43 UTC, of so-called whales moving their coins from addresses on exchanges to other unknown locations and wallets.

The Twitter account Whale Alert immediately posted the news when Ethereum whales moved around 800,000 ETH in eight transactions of 100,000 ETH worth $2.4 billion.

The preparatory launch of the Asian digital currency

Bitcoin’s whales weren’t idle either; the onchain action saw the transfer of 72,999 BTC from two crypto wallets. Subsequently, the 72,999 BTC moved again but in increments of 2,000 BTC.

Binance and OKEx, after being blocked by Chinese search engines, are now preventing users with Chinese phone numbers from registering and generating an account.

Looking at China’s latest ban, investment strategist Raoul Pal suggested the move could be a way to take crypto off the map before the launch of the digital yuan in the country.

China’s CBDC has now entered the pilot phase, with four cities taking part in the trial and the aim to launch it in February 2022.

Chinese law could be a brake on the global adoption of crypto

eToro’s take on Bitcoin in China

Simon Peters, cryptoasset analyst at eToro, took a multifaceted look at the consequences of the latest Chinese bans and events affecting global financial markets.

Starting with the Evergrande crisis, which due to debt fears could hit and have negative effects on stablecoins such as Tether, Peters highlighted:

“With Evergrande creating 2008-style contagion risk for debt markets, stablecoins could run into trouble were the commercial paper they hold to lose value. Unfortunately, as such a crisis is unprecedented, it remains to be seen what will happen next”.

Another aspect examined by the eToro analyst is the reaction of the markets which, following the regulations against the use of crypto assets, has seen a large sell-off in bitcoin and other altcoins.

According to Peters,

“the move could prove to be a brake on the global adoption of crypto. One in seven of the world’s population is now officially frozen out of the cryptoasset market”.

From a price perspective, fear and uncertainty had already set in in May due to China’s ban on any mining activity, which took the value of BTC to $30,000. On volatility, Simon Peters said:

“This latest price fall could be seen as an opportunity for unfazed long-term holders to ‘buy the dip’ and further build up portfolios at lower prices”.

At the time of publication, the Bitcoin Fear and Greed Index recorded a value of 26, while the Ethereum Fear and Greed Index reports a value of 35.

The index signals fear and suggests that investors are cautious and risk-averse following the Chinese government’s latest measures.

 






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