Bitcoin News: A finance committee within the China State Council said one of its upcoming priorities is to reduce bitcoin mining and trading activities.
Whether or how such comments could be implemented has yet to be seen, but the news frightened some local traders and miners.
China and Bitcoin disclosures
China’s comments, which mean the latest pressure on bitcoin mining and trading, have sparked some fear among local traders and miners as USDT has suffered a significant drop against the Chinese yuan since the news went down.
The State Council of China, the country’s central government body, published the minutes of the May 21 meeting at 22:00 Chinese time on Friday, hosted by the Financial Stability Improvement Committee. During the meeting, comments were made on “Bitcoin mining and reducing trading activities” as part of the committee’s efforts to prevent financial risks.
This is particularly the first known example of comments on bitcoin mining and trading being raised as a high-level signal at a State Council committee meeting. Whether this top-notch comment will be made or how and to what extent will it be executed remains to be seen. However, it seems that the news has already scared local investors.
Addressing China-based cryptocurrency traders, Huobi, OKEx and Binance’s stock token HT, OKB and BNB fell 17%, 19% and 10% respectively in the hour after 22:00 local time. In the following days, the decline was even longer. Meanwhile, BTC and ETH fell nearly 10% shortly after the news broke out, but since then it has returned to $ 37,000 and $ 2,300 respectively.
Moreover, within hours of the news reaching China-focused cryptocurrency and mainstream media, the exchange rate between Tether’s USDT and the over-the-counter Renminbi depreciated significantly.
This means that, amid the uncertainty created by meeting comments, local traders, including miners, are seeing an increasing order volume to convert USDTs to Chinese yuan via OTC desks.
Dovey Wan, co-founder of Primitive Ventures, said on Twitter that “in the last 6 hours since the news broke out, he knew that several major miners had been making money, sold mercilessly, and seizing all possible channels for the switch to fiat money.”
Real-time bids for 1 USDT at OTC tables in Huobi, OKEx and Binance are currently at 6.33 yuan, but have dropped from 6.5 yuan before the news to 6.2 yuan at midnight Chinese time on Saturday. Currently the exchange rate for 1 USD is around 6.44 yuan.
Meanwhile, blockchain data shows that real-time hashing power connected to large Bitcoin mining pools has seen some minor to moderate declines within 24 hours since the news went down. However, Huobi’s Bitcoin mining pool has dropped by 29% in the past 24 hours. Overall, there has been a significant drop in Bitcoin hash power since last week as China’s power plants in Sichuan are facing energy constraints.