For the first time, a Chinese government official recognized the value of Bitcoin and other cryptocurrencies. People’s Bank Deputy Governor Li Bo said these assets are an important part of the future, according to a report by Colin Wu at the Boao Asia Forum.
Bo said Bitcoin and cryptocurrencies should be viewed as alternative investments, revealing that China is investigating regulatory policies regarding these assets. The officially cleared cryptocurrencies are not legal tenders, and other stable coins added require “tighter surveillance” in order for them to be widely distributed. Bo said:
Although this regulation rule is the minimum regulation rule, there are still regulation rules. And it must be ensured that speculation in such assets does not create serious financial risks. In other words, before we figure out what regulatory rules are needed, we will stick with the current policies and practices.
In this case, Bo was accompanied by former governor of the Central Bank of China, Zhou Xiaochuan, who emphasized that “finances”, cryptocurrencies and digital assets should serve the “real economy”. Xiaochuan later said he had a “question” about whether bitcoin and digital currencies have “benefits” for the real economy.
China’s digital yuan, attack on Bitcoin and the dollar?
The Chinese central bank is developing its digital RMB or digital yuan. The institution is currently testing and developing the user interface, wallet and other functions of the Central Bank for Digital Currency (CBDC).
The deputy governor of the People’s Bank of China said the government did not intend to replace “the US dollar” or any other currency. Bo claimed the CBDC was designed to “facilitate trade and investment” and expects the market to “choose” the best way to do so.
As reported by Dovey Wan, founding partner of Primitive Crypto, digital currency and electronic payment (DCEP) is being tested in Shenzhen Province. The initial integration could come from state rates, Wan said:
(…) Some municipal payments and public economic activities are done first and then by merchants. China is really good at implementing new technology – on a large scale, this will be no exception.
Bitcoin (BTC) is trading at $ 55.776, losing 8.1% on the daily chart. In the weekly and monthly charts, BTC shows losses of 7% and 3.7% respectively.
BTC with moderate losses in the daily chart. Source: BTCUSD Tradingview
China seems to have influenced the price development of Bitcoin last day. Analyst Willy Woo said BTC’s price drop was due to the expectation that miners in China would “go offline”.
#marketupdate, break down, post mortem.
We just saw the biggest drop in the mining hash rate in a day since November 2017. The hash rate on the network has essentially halved, which caused chaos in BTC price when it crashed. pic.twitter.com/zzdgDikjXt
– Willy Woo (@woonomic) April 18, 2021
The increase in selling pressure over the weekend was also enough to trigger many liquidations from “short-term speculators”. Hence, the volatility of BTC has increased. Woo said he was still bullish in the long run.