Everything has turned red today, courtesy of red China, with ethereum taking more beating than most, down 11% to near $300. But all the rest are down too, with bitcoin falling by some $700 in the past two days, down to $4,300.
The decline then continued yesterday, but it was a bit more sharp today after news came out that china has enacted a sweeping blanket ban of all ICOs, prohibiting institutions from dealing with any ICO while ordering investors refunds for ICOs that have already taken place.
China has hardly been a player in the ICO market. It’s $10 billion market cap comes mostly from western projects or projects outside of China, with only around half a billion estimated to be domestic to the country.
Their decision, therefore, while rumored, is somewhat unexpected in its sweepingness. While its timing somewhat closely coincides with the crypto-wide sell-off.
That coincidence is raising some questions. Was the decision actually made on the morning of September 2nd? If it was, did any of those responsible for making the decision, or anyone knowledgeable of it, engage in trading of digital currencies like bitcoin and ethereum?
We don’t know the answer, but it would be a good explanation for the sell-off. Alternatively, you could argue bulls simply run out of charge, but the bears must have been very confident to suddenly engage in such considerable sell-off when ethereum had not even reached all-time high yet.
Bulls, however, usually come on top with any China related matter after bears enjoy some red candles. Bitcoin, for example, rose to new heights earlier this year after China intervened.
That may be because regardless of what their authorities want, the innovative and entrepreneurial people of China seem to always find a way to circumvent restrictions on economic freedom.
Moreover, the jurisdiction is only one among many global jurisdictions. Chinese entrepreneurs, therefore, could set-up shop in Hong Kong, South Korea or Japan, serving the domestic market from there.
While non-Chinese entrepreneurs will probably want to avoid the country all-together now that it has made clear its hostility towards this space.