This theory is already circulating in Chinese crypto circles, at least personally. But those close with China will recognize the firm solemnity that heads up to these kinds of events, which crackdowns may accompany on activity that the government views as a threat to Shehui Wending or social stability. The calendar may give a clue. Unfortunately, the cryptocurrency appears to click into that category.
“The greater meaning is that China has had plenty,” said Bobby Lee, ex CEO of early bitcoin exchange BTCC and presently CEO of wallet service Ballet and writer of “The Promise of Bitcoin.” China has witnessed several frauds, illegal fundraising and people spending money on dealing.
When people spend their money in a market crash, it creates social unhappiness, generating political unrest. The crackdown’s timing is not accidental. July 1 was the 100th anniversary of the Chinese Communist Party. It’s a pride thing. So they want to clean up the mess before July 1. The ceremony is a tightly choreographed spectacle in which disorders are not welcome. The fresh crackdown involves shutting down mining and directing banks to stay off from crypto.
Protector Of Society
This aspect is not limited to crypto. In 2018, The Wall Street Journal announced on authorities negotiating to retain the stock market regular lead-up to the National People’s Congress. An individual investor told the WSJ his agent told him the Shenzhen stock market had deemed his transactions too “disruptive” while a politically sensitive time.
The crypto market is notably volatile and vulnerable to scams, and New, sensitive industries have burned Chinese retail investors. For example, the 2018 failure of the peer-to-peer lending market led to massive financial losses, protests and even death.
Crypto has grown relatively rapidly in China. It could grow even more. One of the teachings authorities learned from the P2P lending crisis is that “they didn’t stop it soon enough. When people in China lose capital, they accuse the government. The government works the role of a protector of the community. The government’s role is to ensure everything is orderly and secure. Anything that goes awry, it’s the government’s role to set it, which brings us back to social stability. The ultimate thing the Chinese government requires is for a flash-in-the-pan coin to implode, driving angry investors to take to the roads. Mass demonstrations of any kind, whether on the government, a crypto project or an exchange, express just the sort of unrest that Beijing wants to withdraw, especially before a high-profile political event.
The critical timing determinant may be the bull market of 2021, during which bitcoin continuously rose to new highs. More and more Chinese people become involved in crypto trading, so it threatens the government. The main reason for the crackdown is the rapid increase of the complete users of cryptocurrency in China in the preceding six months. Perhaps the environment will become more comfortable, at least until the next significant holiday. But some would claim that over the long term, it doesn’t matter. China’s 2017 crypto crackdown sparked a short
price crash, accompanied by a bull run. The market has only risen exponentially since then.
If China closed down all of its mining; bitcoin will remain, which will determine bitcoin is resilient. The more pressure tests they go through, the more confidence people have in the system.