The People’s Bank of China (PBoC), the country’s central bank, has reinforced its position that digital asset activities are illegal within China, reaffirming its strict crypto ban.
This latest move has led to a significant dip in the global cryptocurrency market, with Bitcoin losing 5 percent of its value in the past 24 hours.
The PBoC cited the risks linked to crypto assets, particularly stablecoins, as the key rationale behind its decision, asserting that virtual currencies are unsuitable for use as legitimate money. The bank also reiterated its commitment to maintaining strict oversight over cryptocurrencies to curb illegal activities.
As a result, the global crypto market’s total value dropped to $2.93 trillion, with Bitcoin falling below $92,000.
Bitcoin, which started the year at around $93,425, experienced a sharp decline to roughly $74,500 in April, following uncertainty surrounding US President Donald Trump’s tariff policies. However, as tariff-related concerns eased and the US Federal Reserve began a rate-cut cycle, Bitcoin rebounded, reaching a record high of $126,199 in October, marking an annual gain of approximately 35 percent.
Yet, Bitcoin’s momentum stalled, and by November 21, it had fallen to $80,667—its lowest point since April. The cryptocurrency continued its downward slide, erasing all its gains for the year.
Ethereum, the world’s second-largest cryptocurrency, mirrored Bitcoin’s trajectory. It started the year at $3,345 but dropped to $2,839, losing over 6 percent of its value in 2023.
Ali Eselioglu, CEO of Turkish crypto exchange CoinTR, said that while China has enforced a ban on crypto trading and mining, Hong Kong has adopted a more flexible regulatory approach. Eselioglu pointed out that while Beijing continues to regulate certain tokenization projects and corporate stablecoin initiatives, it is simultaneously advancing its own digital currency, which now serves hundreds of millions of users.
“While China maintains its restrictive stance on cryptocurrencies, it is also building a centralized alternative,” Eselioglu explained.
Eselioglu further emphasized that the PBoC’s recent declaration, labeling cryptocurrencies and stablecoins as illegal forms of payment, has contributed to uncertainty in global markets.
“Statements from a global superpower like China can have a short-term impact on market sentiment. I believe China’s announcement contributed to the pullback in Bitcoin’s price,” he said.
This move is not an isolated event, as Eselioglu pointed out that it aligns with China’s broader policy framework, which has been in place since 2021.
“While the immediate price reaction may be temporary, in the medium to long term, Bitcoin and other cryptocurrencies will be shaped by global macroeconomic factors and regulatory developments, particularly those centered in the United States,” he concluded.
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