China's Attempt to Kill BTC Failed - 3 Reasons
The recovery of the BTC hashrate, stable P2P markets, and the volume shown by Asian exchanges prompt the conclusion that China's attempt to destroy digital gold had failed. So, first things first.
Backstory
The Middle Kingdom began to put a spoke in the BTC wheel in May 2021 (discover more in our article). That's when Chinese miners faced the first bans. A general policy against mining and crypto in the country was finally confirmed at the end of June. As a result, the CNR completely banned the process of verifying crypto transactions and adding them to the blockchain in a slew of regions, referring to concerns about energy-intensive production and environmental pollution. This led to the largest correction in the difficulty of mining. The market mood around BTC was already undermined when Tesla suspended digital cash payments (the ”non-ecological " nature of mining is to blame). We are left to wonder whether China's decision has something to do with Musk's statements. One thing is clear - these events could not but have a negative impact on the industry.
China also blocked the requests of "crypto-exchanges" on search engines. The People's Bank of China went further, demanding local banks to cut off any funding channels for crypto OTC merchants.
Some analysts called such a policy a psychological manipulation, but looking back, it seems that China has taken a number of steps to destroy the BTC network and mining (read why regulators are going after crypto here).
The falling prices of decentralized coins and concerns about the so-called 51% attack can be seen as a short-term success of China. Of course, its ban has become a big challenge for many miners and the market as a whole. Nevertheless, the attempt to destroy BTC ultimately failed, and here are the basic reasons why.
Hashrate Recovery
The mining peak was recorded in May when the hashrate of the network of the most popular cryptocurrency reached 186 mln TH / s. After that, the indicator began to fall sharply, soon reaching 85 mln TH / s, the lowest result in two years.
However, the computing power of the BTC network went back to being normal in less than a month. Some miners migrated abroad and came back to their professional duties.
P2P Markets
Despite the fact that companies that participated in crypto transactions were banned in the country, individuals went on acting as mediators - some of them registered more than 10,000 successful P2P transactions according to the exchange's own rating system.
Huobi, the world’s leading crypto exchange, and Binance, the largest crypto exchange by trade volume, allow users to trade several cryptocurrencies, including USD Tether (USDT).
After converting fiat into stablecoins, operations on regular and derivatives exchanges become possible.
Asian Exchanges
If China was hoping that the repressions would put an end to crypto trading, that's a huge mistake. They are likely to affect exchanges previously based in this region, such as Binance, OKEx, and Huobi. Nevertheless, given the recent volume statistics, there was no significant impact. Asian exchanges remain the leaders, while Coinbase, Kraken, and Bitfinex are lagging far behind in this respect.
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