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China’s Long History of Bitcoin FUD: Timeline

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Even after more than a decade of continuously banning cryptocurrencies, China has still not learned that bitcoin always triumphs. 

Right from the very first year bitcoin came into existence, the Chinese government has gone after the primary cryptocurrency, hammering it with bans after bans while citing countless risks supposedly associated with it.

In over a decade, the Republic of China has also managed to increase its FUD (short for fear, uncertainty, and doubt) in the industry, and each time, crypto had seen a massive hit. Just last week, bitcoin’s price fell by more than 5% within hours, owing to another regulatory reiteration from the Chinese authorities to ban cryptocurrencies.

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Before we dive into the long history of China FUD, there is good and bad news to this story. The bad news is that this kind of Chinese FUD is likely to continue, at least over the next years. However, the good news is that the effect on the price of Bitcoin seems to be decreasing over time, as BTC is becoming more and more resistant.

China FUD Vs. Bitcoin

With the endless bans and unnecessary repetitive threats, one might think it’s a well-coordinated effort to bring bitcoin’s price down. But that is perhaps a story for another day.

For now, let’s walk down memory lane and see all the times China has raised FUD levels in the crypto market through its endless hostile stance and vows to end crypto activities and how the industry continues to triumph.

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China's Bans on Bitcoin. Source: TradingView
China’s Bans on Bitcoin. Source: TradingView

2009 – Ban on Digital Currencies

In June 2009, just a few months after bitcoin was launched, China’s Ministry of Commerce and Ministry of Culture banned the use of digital currencies in making payments for real-world goods and services.

The move, however, was not explicitly targeted at bitcoin, instead, it was to curtail several video-game currencies that were supposedly devaluing the yuan.

2013 – China Pops Following Bitcoin’s First Major Bull-run

Four years later, in December 2013, the world’s most populated nation made its first direct attack on the use of bitcoin, calling it ‘a currency without real value.’

The People’s Bank of China (PBoC) and the IT Ministry published a note mandating every Chinese financial institution to stop processing bitcoin transactions.

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The effect of that notice was immediate, forcing bitcoin’s price, which had just crossed the $1k mark, to plummet massively – the first price impact out of many to follow.

ChinaPBoC
The People’s Bank of China. Archive

2014 – The Bear Market Driven by China FUD

After bouncing back from the 2013 China FUD, the crypto industry was once again struck with another devastating report that the “PBoC has placed an outright ban on Bitcoin transactions.”

While that news, which was published in March 2014 by Weibo, turned out to be false, its effect on the market was catastrophic. Thousands of traders and investors liquidated their positions, and bitcoin’s price took a nosedive. BTC, which was trading above the $1k mark by end of 2013, was heading towards $400 just three months after.

2017 – Exchanges Forced to Leave China

2017 will always remain a memorable year in the history of crypto. It was the first time that bitcoin hit $20,000 in December, yet, it was ridden with more FUD from the Chinese government than in previous years.

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In mid-2017, the PBoC dropped two regulatory bombs in the same month. The first ban was on Initial Coin Offerings (ICOs), which were trending at the time. The second was targeted at cryptocurrency exchanges.

The authorities insisted that every ICO actively going on in the country should immediately be discontinued, citing that they were illegal forms of public financing and were not authorized by China’s financial regulators.

By mid-September, the PBoC hit the crypto market with the notice of yet another ban. Every cryptocurrency exchange operating in the country was mandated to discontinue its services by end of September 2017, citing risks of their use in facilitating criminal activities like drug trafficking, money laundering, and smuggling.

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Several top crypto exchanges, including Binance – which was operating from China back then, had no other option but to relocate and crypto traders across the country had to move their trading activities to overseas platforms via VPNs.

The prices of the leading cryptocurrencies suffered. But as always, the market recovered within three months, and it even turned out to be a breaking point for crypto worldwide as BTC hit its then all-time high (ATH) of $20,000 in December 2017.

binance_chain_cover
Binance. Left China in 2017, found a new home in Malta

2018 – Targeting Mining

In early 2018, Bitcoin suffered one of its biggest price crashes in history. Shortly after ending 2017 with highs of $20,000, the value of the primary digital asset fell by more than 65% against the USD around February of that year.

While there was no solid reason for the decline, several reports suggested that the plunge was closely tied to the Chinese New Year and rumors of a new crackdown on crypto mining.

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In August 2018, China reportedly issued another document officially banning all crypto activities in the region. The paper focused on communication channels as it prohibited commercial venues like  WeChat accounts, media outlets, and others from hosting any crypto-related events or activities.

2019 – Bitcoin Mining Ban Confirmed

Rumors of a massive crackdown on bitcoin mining were confirmed in April 2019, when a draft warning from the country’s National Development and Reform Commission (NDRC) noted that the regulator was planning to eliminate these activities in China.

The draft argued that bitcoin mining did not adhere to relevant laws and regulations set in place and polluted the environment. BTC’s price, once again, dropped significantly.

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2020 – Power Stations Ordered to Halt Power to Miners

With the outset of the COVID-19 Pandemic, several Chinese miners liquidated their crypto holdings, resulting in the massive bloodbath in March, which saw bitcoin and almost all altcoins losing more than 50% of their value.

Despite the global pandemic, in May 2020, local government authorities in the Chinese province of Sichuan were seeking to ban cryptocurrency mining operations in the region.

In October, the market was struck again by a ban on crypto trading. Offenders were threatened with fines that were five times the value of their crypto funds.

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In December, power stations in the Yunnan province, where many of the largest crypto mining hubs in China were located, received mandates from the local authorities to stop providing power to miners in the city. This resulted in a sharp drop in bitcoin’s hash rate.

However, bitcoin was able to break the $20,000 mark and end 2020 with a new ATH of over $30,000. The hashrate also recovered somewhat rapidly.

2021 – Miners Leave China: Crypto is ‘Illegal’

2021 started off for bitcoin and the crypto market at large. After ending the previous year with a high of 30,000, BTC continued to chart new records until it peaked at around $65,000 in mid-April.

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However, things quickly became dark for crypto traders as the Chinese government embarked on a nationwide campaign against crypto mining and trading. It reiterated its warnings for the 20th time to citizens about the risks associated with investing in such “speculative” assets.

Even though every financial service provider and payment gateway in the country has already been prohibited from working with crypto entities since 2013, the news resurfaced in May 2021 and sent the crypto market crashing down the hill. Bitcoin lost nearly half its value in weeks.

Within the last four months, China has intensified its fight against crypto activities like never before. In June, officials reiterated the bitcoin mining ban (again) and went on a massive crackdown on bitcoin mining facilities, forcing miners to shut down their machines.

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The clampdown on such operations not only affected several key on-chain metrics and caused prices to drop but also prompted the still-ongoing Great China Mining Migration, as miners in the region started moving to other crypto-friendly locations.

In July, another report emerged that the PBoC shut down a tech firm allegedly providing software services to local cryptocurrency entities. Bitcoin’s price immediately fell as soon as the news broke.

In August, China went after crypto influencers, and the government shut down the website and social media handles of the country’s high-profile blockchain center.

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On September 24, the market took another hit as the PBoC supposedly declared that all crypto-related transactions in the country are illegal. Even though the news was from September 3, it did not stop bitcoin’s price from shredding $4,000 within hours, causing massive liquidations.

Verdict: Bitcoin Always Triumphs

For the past years, the Chinese authorities have often tried to bully bitcoin and force it out of existence, but all its efforts – so far – have always proved a failure. The crypto industry continues to thrive as the market usually recovers from whatever blows it receives from the giant Asian nation.

Bitcoin has retained its position as the largest cryptocurrency, with an influx of large institutional investors fueling its adoption rates.

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Judging by the patterns of the previous cases caused by the Chinese government, bitcoin often goes on a massive bull run within a few months after suffering the effects of the same old regulatory song from China.

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These Bitcoin, Ethereum and Solana Price Prediction Charts Are Pure Magic, According to Macro Guru Raoul Pal

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Macro guru Raoul Pal says three price prediction charts for Bitcoin, Ethereum and Solana are working like “pure magic.”

In a new Crypto Banter podcast, the co-founder and chief executive officer of Real Vision compares Bitcoin’s current market cycle to that of 2012-13, suggesting a price target of over $250,000 for the end of this bull run.

“I’ve been using this for over a year, and it’s been pure magic…It gives us a pretty clear target, and it’s been magic. It gave me the strength through the bear market to keep adding, thinking ‘we know how this plays out.’”

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Source: Raoul Pal

The former Goldman Sachs executive then pulls up another chart that compares Ethereum’s price trend from 2016 to Bitcoin’s from 2011 to 2019.

“And so here’s Ethereum VS Bitcoin in 2017. It’s been pretty damn good. In fact, I’ve got this as a real-time chart on my Bloomberg and it almost works to the day right now [because] it’s so close.”

Source: Raoul Pal

Lastly, Pal brings up a chart that shows how smart contract platform Solana (SOL) is following the same path Ethereum did in 2016-2017, which if continued would land SOL above $800 in April 2022.

“The Ethereum price now is pretty exactly in line with the Bitcoin price in 2017. And here’s Solana at the price as ETH, growing faster as a network, but the chart is identical again. It’s crazy.”

Source: Raoul Pal

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Barry Silbert on Converting GBTC Into ETF: “Stay Tuned”

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Digital Currency Group CEO Barry Silbert has started teasing Grayscale’s ETF push

Barry Silbert, CEO of Digital Currency Group, urged his followers to “stay tuned” in response to a tweet about potentially converting its Grayscale Bitcoin Trust into a physically-backed exchange-traded fund.

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ProShares’s Bitcoin futures ETF is set to start trading on Monday after it was greenlit by the U.S. Securities and Exchange Commission earlier this week.  

However, the regulator has so far shot down all the proposals to launch an ETF that will not track the price of Bitcoin directly due to concerns about investor protection. Instead, investors will have exposure to the Chicago Mercantile Exchange’s futures contracts.  

Joe Orsini, director of research at Eaglebrook Advisors, has outlined some risks associated with a futures-based ETF in his recent thread, claiming that it will be applicable for intra-day trading instead of long-term investing.

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Last month, Grayscale CEO Michael Sonnenshein opined that approving a futures-based ETF before a spot-based one would be a “short-sighted” decision.

According to a Thursday report by CNBC, the company is very close to filing with the SEC in order to convert GBTC into a spot-based ETF.

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As reported by U.Today, Grayscale hired ex-Alerian CEO David LaValle to work on such a plan this September.

The leading cryptocurrency asset manager confirmed that it was intending to convert its Bitcoin trust into an ETF in early April.

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Bitcoin ETF Approval is a double Edged Sword in Terms of Price Discovery

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Futures based paper products don’t lead to natural price discovery. There’s so much the players can manipulate on these paper products, which will be fixed in a physically-backed ETF.

In response, Caitlin Long expressed:  Yep, but physically backed ETFs also foster spot price manipulation. As I’ve said for yrs, Bitcoin ETF approval is a double-edged sword.  It brings liquidity, but also brings Wall Street style manipulation and price suppression.

Community response:  I don’t see ever any logic here. Crypto is the Wild West, when it comes to manipulation. How does having liquidity in a more regulated market make the manipulation worse?

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Crypto markets are way more manipulated than any other asset class. Adding an ETF would only dilute the manipulation.

Supply is real with bitcoin paper copies won’t bring more real supply, but can’t the paper push around the price like in gold and silver? I think they will try but will soon discover that the underlying asset isn’t as elastic as gold and silver with a significantly lower inflation rate and stock flow.  Also, gold and silver aren’t 100% auditable by everyone on the planet at all times.

How does a spot ETF foster price manipulation? I don’t really understand the logic here. Most likely, the ETF would simply be buying and storing Bitcoin every single day of its existence.

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What do you think the manipulation would look like? With the open source monetary policy and public blockchain ledger, I think any manipulation would have to be very short lived. They can’t create millions of ‘paper’ BTC like the precious metals markets.

Yeah but unlike gold and silver we can completely verify the total supply, and punish manipulation out of these honest markets. If on-chain metrics unanimously say one thing, futures manipulation will be that much easier to rectify, no?

Wall Street can short BTC through the floor. My guess is they want to hammer the BTC price down and drive everyone back to USD. Same way they control all commodities.

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ETF is a double edged sword, and anyway there’s a lot of manipulation. So, ETF is nothing significant to care about? If the ETF would hurt bitcoin price more than it would help it, the US would have approved it several years ago.

Hard manipulation like in gold/silver market not possible: Withdraw your BTC from the exchange, as soon as supply dries up the price explodes.

With an BTC ETF, have you removed legal tender? Been thinking on this one and I’m not so sure an BTC ETF is the best thing for BTC in the long run. There is always two sides of a coin.

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How can spot price with proof of reserve be manipulated? And how can we move past the financial products created out of thin air, and toward the purpose crypto was created for?

We already have manipulation and suppression in BTC – The Futures-ETF will only serve to deepen that manipulation/suppression. So, Qui Bono? This is not about investors folks!

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