Authorities in Beijing view crypto with a dim view, with state media predicting that bitcoin will become worthless as China seeks to launch its own coin.
A Chinese Communist Party-controlled newspaper has published a grim prediction about the world’s most popular cryptocurrency.
China Economic newspapery warned investors that the price of bitcoin was “heading towards zero.”
“Bitcoin is nothing more than a string of digital codes, and its returns come primarily from buying low and selling high,” the newspaper said, according to the South China Morning Post.
Stay up to date with the latest cryptocurrencies on Flash. More than 25 news channels in one place. New to Flash? Try 1 month free. Offer ends October 31, 2022 >
“In the future, once investor confidence plummets or when sovereign countries declare bitcoin illegal, it will revert to its original value, which is completely worthless.”
Beijing has launched a sustained crackdown on cryptocurrency since 2017. In May last year, China declared digital tokens could not be used as a method of payment.
The ban means that institutions in the country, including banks and online payment channels, must not offer their customers any service involving cryptocurrency.
Regulators have warned that “speculative trading” has “seriously undermined the security of people’s assets and disrupted the normal economic and financial order”.
Officials also warned that virtual currencies were not “backed by real value”, prices could be easily manipulated and commercial contracts were not protected by Chinese law.
China was once home to the most prolific bitcoin mining operations in the world.
But mining capacity plunged to near zero in August 2021 when authorities launched the “full-scale” crackdown on crypto, shutting down “gigantic Chinese bitcoin mining operations,” CNBC reports.
However, underground mining operations have resurfaced and China accounts for around 22% of global mining, according to data from the Cambridge Center for Alternative Finance, as miners circumvent the official ban.
The Economic newspaperA report indicates that the authorities still have a low opinion of crypto.
The newspaper recently noted the catastrophic collapse of stablecoins terraUSD and luna, with US$200 billion ($291 billion) cut from the crypto market in just 24 hours.
Beijing plans to launch its own digital Chinese yuan – the e-yuan, with the aim of transforming the country into a cashless society.
It is believed that bitcoin price could dive to $20,000 this year, a massive drop from the high of $87,000.
This morning, the price of bitcoin was $29,336, down 50% from six months ago. Ethereum price was $1678.