The past two months in the Crypto space have been very eventful. It almost looks like we wake up to new developments every day. While they are not all good news, there has been a couple of developments during this period that has helped to brighten what has been a rather “morale-dampening” for users and traders of cryptocurrencies. In this article, we have highlighted some of the positive and negative news in the industry to date.
China Enforces Crypto Ban
In one of the negative news that dealt the crypto markets a major blow, China on May 18 banned payment companies and other financial institutions from providing cryptocurrency services. Investors were also warned against trading in speculative cryptocurrencies. Three industry bodies (the China Banking Association, the National Internet Finance Association of China and the Payment and Clearing Association of China) said in a joint statement on the ban, “Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
This is not China’s first move against cryptocurrencies. The country shut down local crypto exchanges in 2017, effectively ending a market that accounted for 90% of global Bitcoin trading at the time.
Iran Banned Crypto Mining
On May 26, Iran announced a four-month ban on the mining of cryptocurrencies like Bitcoin. This was after cities in the country suffered blackouts and Iranian president Hassan Rouhani told a cabinet meeting that was televised that the cause of these blackouts was a drought being caused by crypto mining activities. He said crypto mining activities in Iran — 85% of which are not licensed — drained more than 2GW from the hydroelectric power grid every day.
“The ban on the mining of cryptocurrencies is effective immediately until September 22… Some 85% of the current mining in Iran is unlicensed,” Rouhani said.
In a report by blockchain analytics firm Elliptic, about 4.5% of all Bitcoin mining in the world takes place in Iran and this has allowed the country to earn hundreds of millions of dollars from crypto assets that have helped lessen the impact of U.S sanctions when former president Donald Trump exited Tehran’s 2015 nuclear deal with six powers in 2018.
Elon Musk Announcement
Another major news that sent the market spiralling downwards was when Elon Musk announced that his company Tesla had “suspended vehicle purchases using Bitcoin,” citing concern over the “rapidly increasing use of Fossil fuels for Bitcoin mining.”
This news directly led to a drop of about 5% in the price of Bitcoin within minutes of it getting out. The company until then had made good profits from buying and selling the crypto asset. According to a financial report from Tesla on April 26, the company bought $1.5 billion worth of “digital assets,” and then sold around $272 million worth. The proceeds from this sale allowed the auto giants to make about $101 million in profits.
China’s Shut Down Of Mining Facilities
In its latest ban on the crypto industry, China banned the mining of Bitcoin in the country. The Chinese authorities cited the disruption of economic order, damage of the environment and facilitation of illegal asset transfers and money laundering as the reasons behind the latest clampdown. According to Adam James, a senior editor at OKEx Insights, the ban on crypto mining may see an estimated 90% of all mining activities in the country go offline.
Since the news, miners are shutting down their machines, selling them (with machines going for 700-800 yuan from a previous high of 4000 yuan ($620) since the ban), or even venturing overseas to continue their activities. All of these developments come at a time when China’s central bank is said to be testing its own digital currency.
El Salvador Make Bitcoin Legal Tender
Away from all the doom and gloom, there has also been some positive developments in the Crypto world. The biggest one so far is the decision of El Salvador to make Bitcoin a legal tender in the country.
President Nayib Bukele announced the plan at the Miami Bitcoin conference and lawmakers in the country’s Congress voted in favour of the Bitcoin Law by a “supermajority”, receiving 62 out of 84 of the legislature’s vote.
This development saw an immediate jump in the price of Bitcoin as it went up by 5% to $34,239.17 shortly after the vote.
An excerpt of the Bitcoin Law read, “The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out.”
Adoption by other countries
Following El Salvador’s decision to accept Bitcoin as a means of payment for goods and services, governments of countries around the world are beginning to see Bitcoin in a different light and the adoption of the cryptocurrency is gradually gathering steam.
The central bank of Tanzania is currently working on the adoption of Bitcoin following the directive of President Samia Suluhu Hassan. In mid-June, the President asked the central bank to start looking at how the country could take advantage of cryptocurrencies and blockchain technology. This is a reversal of the country’s previous position towards cryptocurrencies. The country had banned cryptocurrencies in 2019.
“In the financial sector, we have witnessed the emergence of blockchain technology or cryptocurrency,” President Samia said. She continued, “Many countries in the world have not accepted or started using these currencies. However, I would like to advise the central bank to start working on those issues. Just be prepared.”
Following El Salvador’s adoption of Bitcoin and Tanzania’s central bank preparing to adopt the asset class, Paraguay has now become the latest and second country to propose a bill to make Bitcoin a legal tender. Carlitos Rejala, a member of Parliament who has been a supporter of Bitcoin confirmed the bill proposal. If the bill gets passed, Paraguay will become the second country to make Bitcoin its official currency.
However, in the latest developments, lawmaker Carlos Rejala clarified that the bill was only for Paraguay to regulate cryptocurrencies and not make bitcoin a national currency. Speaking to Reuters he said, “It is a bill of digital assets and it differs from that of El Salvador because they are taking it as legal currency and in Paraguay, it will be impossible to do something like that.”
Conclusion
All of these happening in the crypto ecosystem has seen the price of Bitcoin and other major cryptocurrencies fall, with Bitcoin trading at $36,000 at the time of writing this. The market is only just beginning to pick up after getting to lows of $30,000. People have reacted differently to these happenings with what has so far been an obvious battle between the bulls and bears for the soul of Bitcoin.
The asset has however managed to peg $30,000 as its new resistance which is a good thing and shows the coin can only retest at this level if things go bad again. With all of the FUDs and distractions going around, Bitcoin is outperforming expectations and can only keep attaining greater levels from here on.
