- Hong Kong-listed OKEx and Huobi have come under pressure in the last few days after China warned about a cryptocurrency crackdown.
- Huobi has seen the largest drop of up to 20 percent after halting some trading and mining operations amid fears of regulatory scrutiny.
Last week, the market was awash with fear, uncertainty and doubt (FUD). This was mainly coming from China where the government made some worrying remarks that rattled not only local traders, miners, and crypto-focused companies but also the wider international community. In the last couple of years, China has been integral to the general health of Bitcoin and the wider market. For starters, Chinese investors account for more than 60% of the trading volume of perpetual contracts.
Additionally, the country accounts for a majority of the Bitcoin hash rate with a lot of mining taking place in the region. With the government singling out mining as one of the key industries it will go after, there was bound to be some negative reaction.
Bitcoin and a majority of other coins last week wiped out more than 20 percent of their value. In fact, the entire market lost roughly $1 trillion, more than its value in 2017.
Huobi sheds 20 percent
In the wake of the recent regulatory developments, Huobi is making adjustments in anticipation of big changes. It is reported that Huobi has suspended a few services including mining in China. A spokesperson noted,
Due to recent dynamic changes in the market, in order to protect the interest of investors, a portion of services such as futures contracts, ETP, or other leveraged investment products are temporarily not available to new users from a few specified countries and regions.
Since the move, the company stock has been falling. According to Wu Blockchain, it has fallen by as much as 20 percent. OKEx has also recorded a significant drop as it wiped out around 14 percent.
The prices of the Hong Kong listed companies of OKEx and Huobi fell by 14.9% and 20.1%, showing the panic of stock investors before the Chinese government's next policy. Huobi has already applied for multiple crypto funds. But their listed companies do not include exchanges. pic.twitter.com/kaChXMgLn4
— Wu Blockchain (@WuBlockchain) May 24, 2021
China holds a gun on Bitcoin
The Chinese government has not been a fan of Bitcoin or any other cryptocurrency for that matter. The recent price surge and mass interest will only have agitated regulators. Crypto remains one of the few things that the government cannot control. It could also potentially undermine the government’s central bank digital currency (CBDC) set for launch in a few months.
With the government giving little details on how exactly it will curb mining and trading activities, it has left investors in the dark. Not only does this mean that investors speculate on the worst possible outcome but it also leaves room for the regulators to regularly drop hints that disrupt the market without any concrete plan or action. This FUD could potentially go on for weeks or even months and mark the end of what was a promising year for the crypto market.