This month, China has banned Bitcoin and cryptocurrencies for what feels like the one-hundredth time. The country regularly switches from hot or cold on the asset class, depending on what serves its political motives best at the time.
China FUD always seems to arise when Bitcoin price is at a pivotal moment, and usually takes place during a bull market, as if the intent of the FUD is to slow it down. It also tends to prove the quote from a man who spent half a century as the richest and most powerful man in the United States, Bernard Baruch, who famously said “show me the chart, and I’ll tell you the news.”
The quote suggests that FUD or even positive news, always coincides with trend changes and vice-versa. For example, the first glimpse of China FUD in 2021 was what caused Bitcoin to collapse from its local highs around $65,000, starting with a ban of BTC mining in the country. The cryptocurrency’s hash rate plummeted and so did its price.
We’re looking back at the history of Bitcoin and China FUD, explaining what’s going on now, and discussing if Bitcoin will ever be able to fully dodge the impact of future FUD, causing it to lose its effectiveness. We’ll also tell you how you can even learn to take advantage of such FUD, and turn a profit from it.
The Brief History Of Bitcoin China FUD
The first major blow to Bitcoin, wasn’t truly directed at Bitcoin at all. This situation arrived just six months after Bitcoin’s debut, so there was negligible impact on the price at this point, because it was still relatively worthless. However, it did have the potential to prevent the project from ever getting off the ground in the first place. Except Bitcoin always survives the FUD China sends its way, as you will learn throughout this story.
At the time, China prohibited all virtual currencies, but the move was more so directed at video gamers making in-game purchases. Bitcoin, or crypto is never explicitly mentioned in the prohibition, but at this point the coin likely wasn’t on the country’s radar.
Eventually Bitcoin began to gain real value, and as it neared $1,000 per BTC, The People’s Bank of China, the country’s central bank, blocked banks across the region from conducting Bitcoin-related business. This prompted Baidu to stop accepting BTC payments, and an enormous price drop.
A month later, online distribution giant Alibaba followed suit, banning Bitcoin transactions and the sales of BTC miners. Sound familiar? Mining was often a target of China, where it was said as much as 60% of all BTC miner operations were centralized. China repeatedly targeting miners has weakened the dominance China once had over crypto, essentially making the ecosystem healthier by accident and proving Bitcoin’s resilience.
Things quieted down over in China for several years, probably because so did Bitcoin and the rest of cryptocurrencies. It wasn’t until another bull market when China began an offensive against crypto once again, this time attacking Bitcoin exchanges to “prevent capital from fleeing to digital currencies.”
Latest String Of China FUD Takes Shot At Crypto
Reports of China supporting cryptocurrencies were common at the start of the 2020 bull run, which lead to a stronger start to 2021. By the time Bitcoin hit $65,000 and saw its first correction, China began its latest onslaught of fear, uncertainty, and doubt.
China completely banned BTC mining, where as much as 60% of all mining operations were said to be centralized. Bitcoin price collapsed to $28,000 at the current low, and is currently at risk of falling deeper as China begins to lay it on thick.
Now, as Bitcoin is back at $43,000 and the country is on the brink of economic disaster due to the situation with real estate giant Evergrande, and could be trying to prevent a flight of capital into cryptocurrencies yet again.
Interestingly, China is also in the process of rolling out its own central bank issued digital currency, which could also give the country reason to consider blocking citizens from using or buying crypto.
What To Do When FUD Strikes
When you hear about the new China FUD in the news, knowing how to short Bitcoin can be highly profitable. However, eventually the same old story will lose its effectiveness. FUD from China is already starting to have less and less effect, and during a bull market, is known to cause the final dip before the market cycle finishes.
Could that be what’s on the way for the first ever cryptocurrency? Well, if Bitcoin price can hold support even during a storm of FUD from China, and regulatory influence from the United States beginning to take a negative tone, then the strength of the asset will have defeated all adversity, and would be a major buy signal.
At that point, shorting Bitcoin would likely lead to a squeeze, so a long position would be ultimately a better play. Sentiment around Bitcoin is extremely bearish, which would mean that a contrarian stance might be necessary. The market has fallen into extreme fear according to the crypto fear and greed index, which suggests a bounce could be near.
Fight FUD And FOMO With PrimeXBT
Whatever happens with Bitcoin, traders can prepare themselves for whichever way the market turns next, with the award-winning PrimeXBT. As one of the fastest growing platforms around, there are several ways to take advantage of the coming cryptocurrency trend. If things turn downward, users can short Bitcoin and other cryptocurrencies, and even trade traditional assets like forex, stock indices, commodities, and more. If the trend picks up and Bitcoin bounces hard, going long or buying BTC for long-term holdings is also possible.
Finally, for those that simply aren’t sure what to do next, there are built-in technical analysis tools to help predict what’s to come, or you can turn to the Covesting copy trading platform and let strategy managers make the decisions for you, and simply copy their trades.
