China proposes to ban the mining of cryptocurrencies - Kakiforex | Forex markets for the smart money. China proposes to ban the mining of cryptocurrencies China proposes to ban the mining of cryptocurrencies

April 5, 2021

China proposes to ban the mining of cryptocurrencies

 While the Indian authorities are pondering whether to impose a complete ban on the production and use of bitcoin and other cryptocurrencies on their territory, China has proposed to ban mining. However, we are talking only about one region of China, namely, Inner Mongolia. The authorities of the region noted the high consumption of electricity used in the production of cryptocurrencies. Thus, to fulfill the plan to preserve energy resources, according to the economic plan of China, they are going to adopt legislation that will prohibit mining and the construction of new farms for the extraction of "cue ball". It is reported that there is no question of a complete ban on cryptocurrencies in the region. There is also no information about the potential limitations of the cryptocurrency sphere in the rest of China.

At the same time, crypto experts and analysts continue to speculate whether the number one cryptocurrency in the world will be able to overcome the $ 60,000 milestone in the near future. Many believe that this is quite possible, as the fundamental background for bitcoin has improved over the past week. First, Joe Biden and Congress approved the allocation of another $ 2.3 trillion under the stimulus program, of which about $ 500 billion will be distributed among the US population as "helicopter money". Experts believe that part of this amount can get to the cryptocurrency market, thus increasing the demand for bitcoin. Secondly, many note the activities of the company Tesla, which allowed its customers to pay for cars with bitcoins. Experts believe that these two factors will contribute to the further popularization of bitcoin and push the quotes up. However, some point out that as the US economy recovers, which is growing at a high rate, thanks to regular, voluminous stimulus programs from the US government, more and more investors will want to leave bitcoin as a crisis investment tool and return to traditional stocks and bonds. Skeptics also believe that the market has already stopped responding to every message about the popularization of bitcoin with new purchases. If a couple of months ago, one tweet by Elon Musk could lead to an increase in bitcoin by 5-10 thousand dollars, now the news about the integration of cryptocurrency into their activities by such whales as Visa, Paypal, Morgan Stanley, and others does not cause such a violent reaction in the market.

We believe that the last thing to expect now is a sideways movement. Bitcoin is a hype tool and does not like long delays at its highs of value. It can drop by 50-75% and spend a couple of years trading in a relatively narrow side channel at these new levels. However, it is very difficult to imagine a movement in the sideways direction of about $ 60,000. To do this, the market needs to come to a state of equilibrium and accept the current value of the "cue ball" as fair. There shouldn't be a massive influx of new investment, however, there shouldn't be a massive sell-off. Given the fact that there are a huge number of retail and small investors in the market who do not have the opportunity to keep bitcoin on their balance sheet for many years and are focused on getting the maximum possible short-term profit, we believe that such a scenario is unlikely. Given the fact that bitcoin has not been able to continue growing for almost 3 weeks, we would conclude that a correction is still brewing. At the same time, no one is immune from the new strong growth of bitcoin, which can be provoked by large institutional investors.