State of the Blockchain: China hits the cryptocurrency market hard

Opinions

Date: 22.02.2018

If you have been keeping an eye on the cryptocurrency market this week, you would have noticed that the values of most tokens are falling significantly. Why is the market free-falling? What is going on in China’s cryptocurrency scene? Are we entering a bear market? Welcome to State of the Blockchain, where we take a look at all the events that happened in the blockchain scene in the past week.

Free-falling market

The total market capitalization of all cryptocurrencies decreased from about US$164 billion to below US$119 billion in the last week, according to data from Coinmarketcap. Bitcoin lost more than a quarter of its value in that time period as it fell from US$4,639 to hit below US$3,300 yesterday. Ethereum suffered a similar loss, as its value nosedived from US$330 to below US$230 yesterday.

The Chinese government is hitting the market hard

Chinese media outlet Caixin reported that the Chinese government has decided to shut down all exchanges that trade RMB for cryptocurrencies.

One of China’s largest bitcoin exchanges, BTC China, has since tweeted that it will cease all China-facing trading operations on September 30. Its mining operations and international exchange will continue to operate normally.

However, amidst the current uncertain investment climate, it appears that the Chinese government has not made an official statement. Other major Chinese cryptocurrency exchanges such as Huobi have not received clear notice to cease operations, according to cnLedger.

Any public announcement from the Chinese government will surely affect the market outlook greatly, for better or worse. We have seen the market fall after recent news of China reportedly banning initial coin offerings (ICOs) and requesting all companies that raised funding through ICOs to refund investors. This succession of negative news is bringing fear, doubt, and uncertainty among investors, and the market continues to carry a downward momentum as it prepares for the worst.

Other top news

  • JPMorgan Chase CEO Jamie Dimon claims that Bitcoin “is a fraud” and “not a real thing” at a recent conference; his remarks apparently caused Bitcoin prices to fall by 8 percent. At another occasion, Dimon said that he’d “fire in a second” any JPMorgan trader who was trading bitcoin, citing that “it’s against our rules, and it’s stupid.” (Fred Imbert/CNBC)
  • Japanese tech giant GMO Internet Group will start mining cryptocurrency and has planned to invest more than US$3 million into this project, according to their press release. GMO plans to develop its own mining chips, claiming they will operate at an unprecedented degree of efficiency. (Joon Ian Wong/Quartz)
  • The Securities and Exchanges Commission (SEC) Thailand has released a statement advising that some ICOs and token sales may fall under the definition of a securities offering. The SEC also expressed concern that some token sales may be used to facilitate fraud against investors. (Stan Higgins/Coindesk)
  • Russia believes that cryptocurrency is a technology that is “impossible to ignore” and should not be banned. Russia’s Minister for Open Government Affairs, Mikhail Abyzov, was cited in a recent interview saying that “…we should officially recognize them as a financial tool and properly handle it carefully so that excessive pressure does not destroy the technology itself.” (Stan Higgins/Coindesk)
  • The executive director of the Reserve Bank of India is looking to create a “fiat cryptocurrency” that can be an alternative to the Indian rupee. (The Economic Times)
  • Investment trading firm Jefferies believes that cryptocurrency mining activities will be a viable growth market for Nvidia and AMD. Nvidia and AMD are the best performing stocks over the past year; their performance is ranked first and second respectively when benchmarked against the entire S&P 500. (Tae Kim/CNBC)

ICOs this week

  • Enigma has finalized a successful token sale, raising US$45 million from over 5,000 contributors. Enigma Catalyst enables anyone to build his or her own crypto-hedge fund by building a decentralized marketplace for financial data and trading strategies.
  • Nexus, a decentralized social media network with an integrated peer-to-peer marketplace and ad platform, has raised over US$5.3 million over a month-long contribution period.
  • Social messaging giant Kik has launched a distribution event for its Kin token, and the team is looking to raise a total of US$125 million. Through a private sale to institutional investors, the team has already sold US$50 million worth of Kin tokens. The token sale is still live at the time of publication.
  • Aventus, a blockchain ticketing platform, has successfully raised US$18.7 million through its token sale, which only lasted about seven minutes.

https://www.techinasia.com/talk/state-blockchain-china-hits-cryptocurrency-market-hard

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