Bitcoin Trims Gains as PBOC Steps Up Crypto Crackdown

Bitcoin trimmed early gains after the People’s Bank of China (PBOC) reiterated its long-held anti-crypto stance, warning institutions against providing services to crypto-related companies.

• China's central bank closed down a Beijing-based company providing software services for virtual-currency transactions and reiterated that no institution under its jurisdiction should engage in such transactions.
• Bitcoin fell from $35,100 to nearly $34,000 after the news started doing the rounds on Twitter.
• Both the PBOC and the Chinese government stepped up their anti-crypto rhetoric in May, adding to bearish pressures around the cryptocurrency.
• China's crypto restrictions have been dominating the headlines and taking a toll on market sentiment since mid-May.
• The National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China published a note on May 18, confirming a ban on crypto services and initial coin offerings originally implemented in 2013 and 2017.
• In June, China's Qinghai province banned virtual currency mining. The crackdown was later extended to the southwest province of Sichuan.
• According to some observers, China's mining ban has dramatically reduced competition for block rewards and improved the profitability for miners based elsewhere.
• However, China's mining crackdown is a one-off event, meaning most of the hash power will return, eventually boosting competition and difficulty. There are reports of miners banned in China moving to Kazakhstan, Russia, and the U.S.
• Bitcoin's sensitivity to negative newsflow out of China has declined in recent weeks. The cryptocurrency appears to have stabilized near $34,000 at press time after the initial decline.
• While similar comments rocked the market in the second half of June, bitcoin buyers were able to defend the psychological support level of $30,000.