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China's central bank has ordered banks and payment institutions to block crypto transactions

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Shivangi Mujumdar Follow

INDIA

Jun, 22 2021

Jun, 22 2021

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Bitcoin dropped on 21-June’21 to a two-week low on China’s growing crackdown on bitcoin mining, as investors grew more uncertain about the future of the most demanding cryptocurrency. China's central bank - People's Bank of China has ordered banks and payment institutions to block crypto transaction.  Bitcoin fell as small as $31,333, a two-week trough, exhausted by other cryptocurrencies. It was last down 10.7%, its biggest everyday percentage loss in a month. 

 

The background behind it- 

 

Some bitcoin investors were anxious further losses could be in store due to a graph formation recognized as a death cross. It exists when a short-term regular trendline crosses below a long-term average trendline. China has been tightening it’s fallen on cryptocurrencies. On Friday, authorities in the southwest field of Sichuan ordered bitcoin mining projects to close. 

 

The People’s Bank of China (PBOC) on Monday informed the country’s biggest financial institutions to stop enabling virtual-currency transactions, growing the negative sentiment in crypto markets. Banks must not deliver products or services such as trading, clearing and settlement for crypto transactions, the PBOC specified in a statement. 

 

They also have to make sure to recognize virtual-currency exchanges' and over-the-counter dealers' capital accounts. It will cut off the payment link for transaction funds in a timely way, it stated. Cryptocurrencies fell, with bitcoin trading near $32,000 and ether dipping less than $2,000 for the first time as of May 23. 

 

What has China witnessed? 

 

When Elon Musk was not demanding manipulating the cryptocurrency market, China is pleased to do so in his place. In a repeat of what we witnessed earlier this year, bitcoin is crashing on Monday, succeeding more bad news from China. 

 

China’s new action against Bitcoin targets mining, which is the electricity-consuming operation of creating new bitcoin units by solving amazingly complex mathematical issues that validate transactions on the network. The bitcoin farms run constantly, with a notable percentage of the world’s bitcoin mining operations being located in China. 

 

It was following the People’s Bank of China’s guidance and would conduct due diligence on clients to root out illegal activities connecting crypto mining and transactions. In other cryptocurrencies, ether, the token used for the Ethereum blockchain, fell to a five-week low of $1,890. It last fell 14.3% to $1,922.05. 

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Shivangi Mujumdar

CBW - External Analyst

INDIA

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