Bitcoin Tumbles 10 Percent in Wake of Deepening China Clampdown

By Reuters
Reuters
Reuters
June 21, 2021 Updated: June 22, 2021

LONDON/TOKYO—Bitcoin tumbled almost 10 percent on Monday as recent volatility in the cryptocurrency market showed no signs of dampening down, with market players citing jitters over China’s expanding clampdown on bitcoin mining in thin liquidity for the losses.

Bitcoin fell as low as $32,094 to its lowest in 12 days, dragging smaller coins down. It was last down 8.3 percent, on course for its biggest daily drop in a month.

The world’s biggest cryptocurrency, long plagued by volatility, has lost over 20 percent in the last six days alone and is down by half from its April peak of almost $65,000. Still, it has still gained over 10 percent this year.

The drop comes amid a growing clampdown on cryptocurrencies in China, where authorities in the southwest province of Sichuan on Friday ordered bitcoin mining projects to close.

The State Council, the Chinese regime’s cabinet, last month vowed to clampdown on mining and trading as part of a series of measures to control financial risks.

Bitcoin mining in China accounted last year for about 65 percent of global production, according to data from the University of Cambridge, with Sichuan its second-biggest producer.

Companies that mine bitcoin—an energy-intensive process—typically hold large inventories of the cryptocurrency, with any moves to sell large amounts depressing prices.

“[The] crackdown on Chinese miners might mean that they are offloading coin into a thin market and taking us lower,” said Ben Sebley of London-based crypto firm BCB Group.

China’s central bank said on Monday it had summoned some banks and payment institutions recently, urging them to clampdown harder on cryptocurrency trading.

Agricultural Bank of China, China’s third-largest lender by assets, said separately it would conduct due diligence on clients to root out illegal activities involving crypto mining and transactions.

Smaller rival ethereum, which tends to move in tandem with bitcoin, dropped as much as 12 percent, falling below $2,000 for the first time in almost a month.

By Tom Wilson in London and Kevin Buckland in Tokyo

Reuters
Reuters