China Crypto Crackdown Drags Bitcoin Down 5 Percent
The central banking authority pointed to hazards linked to crypto assets—particularly stablecoins—as justification for its stance, formally declaring virtual currencies cannot function as legitimate tender. The PBoC pledged continued aggressive monitoring of cryptocurrency activity as part of its broader campaign against unlawful financial conduct.
Cryptocurrency market capitalization tumbled to $2.93 trillion following China's announcement, while Bitcoin slipped beneath the $92,000 threshold.
The flagship digital currency opened 2025 trading near $93,425 but plummeted to approximately $74,500 by April after U.S. President Donald Trump sparked widespread market volatility through his comprehensive reciprocal tariff policies.
Recovery materialized as tariff anxieties subsided and the U.S. Federal Reserve initiated interest rate reductions, propelling Bitcoin to an unprecedented peak of $126,199 in October. Annual returns climbed to roughly 35% during that period.
However, the world's dominant cryptocurrency entered a downward trajectory, hitting $80,667 on November 21—its weakest position since April—before declining further and erasing yearly profits entirely.
Ethereum mirrored this pattern, launching the year at $3,345 before dropping to $2,839. The second-largest cryptocurrency by market value shed over 6% across the full year.
Ali Eselioglu, CEO of Turkish crypto exchange CoinTR, told media that while China banned crypto trading and mining, Hong Kong features a more open regulatory framework.
Eselioglu said that Beijing's interventions in some tokenization projects and corporate stablecoin initiatives show that crypto activities in the region are kept under control, as China is working towards expanding its own digital currency project, which is now used by hundreds of millions of users.
"While China maintains its cautious and prohibitive stance on cryptocurrencies, it is also focused on creating a centralized alternative," he said.
Eselioglu noted that the PBoC's declaration that cryptocurrencies and stablecoins are illegal methods of payment brought uncertainties in global markets.
"Such statements from a superpower like China can have a short-term impact on risk appetite, and I can say that China's statement was effective in the pullback in Bitcoin," he said.
China's current stance is nothing new—Eselioglu said this has been a continuation of a policy framework set in place since 2021.
"The impact on prices can be a short-term market reaction, but in the medium and long term, Bitcoin and other cryptocurrencies will be shaped by global macroeconomic conditions and US-centered regulatory developments," he added.
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