Why is the crypto market down today? Explained
The cryptocurrency market on Friday experienced a significant decline, with a 61 billion dollar dip in total market capitalisation, partially due to new restrictions imposed by China on private cryptocurrency holdings.
China has imposed a fresh ban on cryptocurrency holdings according to a report by Binance. The Chinese government has not only banned trading or mining of cryptocurrencies, but even individual ownership of digital assets like Bitcoin.
Although the current situation is challenging, analysts expect that downward pressure will ease soon, says InvestX, a cryptocurrency and finance related website.
Also Read: Crypto investor tortures Italian man for Bitcoin password in $30,000-a-month NYC apartment
The move by China has led to a general decrease in investor optimism and has caused panic selling that caused a drop in the markets. China has had a hardline approach to cryptocurrency in order to promote the use of the state-backed digital yuan.
With the ban on private crypto holdings, Beijing is tightening its grip on financial flows, potentially accelerating the adoption of its central bank digital currency (CBDC).
Also Read: Who is John Woeltz? $100M crypto king kidnaps, tortures Italian man for Bitcoin password in NYC before dramatic escape
Meanwhile, the Trump administration's decision to favour tax cuts and lower tariffs have the potential to kick off another speculative frenzy in markets, reported Reuters, citing Bank of America.
This US economic strategy could incentivize traders to ditch bonds and start buying back into artificial intelligence and crypto trades, which would risk inflating a market 'bubble."
US vice president JD Vance has advocated for the use of Bitcoin and other cryptocurrencies in order to build on its strategic advantages against China.
During a Bitcoin Conference in Las Vegas, Vance applauded President Donald Trump's executive order in March that created a strategic bitcoin reserve with tokens already owned by the government.
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