As a reminder, the Chinese government has previously done a lot to curb the growth of the crypto market. For example, just over a year ago, cryptocurrency mining was officially banned in the country, which then led to a catastrophic collapse in BTC price and its hash rate.

However, as it turned out a few months later, the miners did not actually leave the country and continued to mine there. The reasons for this are the proximity of mining equipment manufacturers, as well as cheap electricity, which is dirty in itself.

Cryptominer

However, the miners are not embarrassed by this. They have taken to using masking software. So in essence, the hash rate distribution situation around the world has not changed as much as it might seem.

What will happen to Bitcoin’s exchange rate in the future

In an Economic Daily article, journalists accuse Western countries of creating a highly leveraged market with “complete manipulation and pseudo-tech concepts”. Here is the relevant quote cited by Cointelegraph.

Bitcoin is a string of digital codes and its profitability is based on selling the asset higher after buying it. In the future, when investor confidence in crypto dries up or when sovereign countries declare Bitcoin illegal, its price will return to its original value, which is zero.

As a result, the authors of the piece have taken to using old criticisms of crypto, reminding of its lack of intrinsic value and other things. But firstly, ordinary fiat is also not backed by anything. And second, the real value of cryptocurrencies lies in creating a fully decentralized database that is not controlled by governments, bureaucrats and courts. Obviously, this component of independence is much disliked by journalists.

Despite a complete ban on mining in the country, some Chinese miners continue to operate covertly

Most interestingly, the Bank of England has already disagreed with the Chinese statement: its representatives indirectly see significant potential in the accumulation of cryptocurrency during a bearish trend. In particular, John Cunliffe, deputy governor of the bank, said the day before that cryptocurrency companies that manage to stay afloat during the current market crash could become “dominant players” in the industry when the situation changes for the better. Here’s the bankers’ cue.

Whatever happens to crypto-assets in the next few months, I expect crypto-technology and finance to continue to evolve. This could lead to efficiency gains and changes in market structure.

We also think it is almost impossible for Bitcoin to go down to zero, if only because the cryptocurrency is now going nowhere, even if it gets banned everywhere. Yes, its value would surely drop, but it would still be a decentralised alternative to traditional means of transaction. The current size of the niche is unlikely to allow it to disappear, and there will always be those willing to buy coins cheaply now.

The negative impact on the crypto market as a whole has not affected the macro economy, as Federal Reserve Chairman Jerome Powell said during a recent U.S. Senate committee hearing. However, in his opinion, the industry is still very much in need of a clear regulatory mechanism. Here is Powell’s quote on the subject, published by the news outlet Decrypt.

I think the main conclusion is what we’ve been talking about, and what others have been talking about for some time. Namely that cryptocurrencies are an innovative phenomenon. There is indeed a need for a better regulatory framework in the new space.

US Fed chief Jerome Powell

Bitcoin and the vast majority of altcoins have plummeted in value over the past month as many investors, worried about the Fed’s base lending rate hike amid rising inflation, began selling high-risk assets en masse. The logic behind this process is simple – as the rate rises, it is more difficult to take out new loans to grow investment capital, which means investments in risky investments have to be limited.

The magnitude of Bitcoin’s decline

To recap, Bitcoin has already fallen more than 70 percent since reaching its all-time high of $69,000. In previous bearish cycles, the cryptocurrency has fallen an average of 80-85 percent, so at least judging by historical data, the bottom may already be somewhere close.


We think the comments from Chinese representatives are an attempt to wishful thinking. Today, the cryptocurrency and blockchain platform industry is bigger than ever, and it is being actively exploited even in the current bear market. Most importantly, public companies, large funds and even governments of certain countries are already interested in the niche. In this environment, the prospect of Bitcoin collapsing to zero resembles fiction.


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