Bitcoin swings as China regulators punish company over crypto

China has increased its focus on the cryptocurrency industry, adding restrictions on mining, trading and other services

Bloomberg
First Published6 Jul 2021, 05:46 PM IST
A representation of virtual currency Bitcoin
A representation of virtual currency Bitcoin(REUTERS)

Bitcoin fluctuated Tuesday after China’s central bank and a regulator in the capital city took action against a company that was allegedly providing cryptocurrency-related services.

The largest cryptocurrency had risen as much as 3.7% to $35,094 before dropping back after the People’s Bank of China and Beijing’s local financial regulator ordered a company in the city to cancel its business registration. As of 7:55 a.m. in New York it was trading 1% higher at $34,194.

Financial and payments institutions should not directly or indirectly provide virtual currency-related services, the PBOC and the Beijing regulator said in a statement. It named marketing, promotion and display, and location-setting among prohibited activities.

”Whilst not directly affecting crypto, China clampdown on tech firms is another example of it flexing its regulatory muscles against an industry whose oversight has been lacking,” said Antoni Trenchev, co-founder of crypto lender Nexo in London. “Bitcoin too is caught in China’s regulatory crossfire as it’s seen as a threat to the digital yuan.”

China has increased its focus on the cryptocurrency industry, adding restrictions on mining, trading and other services, as well as issuing cautions to entities like banks that might facilitate such transactions. Many miners have shut down or are trying to move out of the country, and mining metrics have showed the decreased activity.

The move came after some chart watchers had been eyeing the 50-day moving average above $36,000 as a potential zone to see a bullish breakout. However, Bitcoin has been stuck in a range of about $30,000 to $40,000 for weeks after dropping from its record near $65,000 reached in mid-April.

“Bitcoin has been trending sideways between $30,000 and $40,000 for the best part of seven weeks now,” Trenchev said. “I expect Bitcoin to remain stuck in this trend for the forseeable future, before grinding higher again.”

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First Published:6 Jul 2021, 05:46 PM IST
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