Keeping yourself up to date with the world’s happenings in the crypto market can help you make smarter investments and ensure a higher profit margin in the future. The month of September has historically made a name for itself for being particularly bad for the crypto trade.
Bitcoin has previously displayed lackluster performance every September. Investors and financial had predicted that September 2021 could be an outlier for this trend, and things could change for the better.
Be it the moment taken up by Bitcoin or the most important updates in the crypto trade, here is a round-up of the events that went down in the world of crypto trade in the month of September 2021.
China’s Crypto Ban
Undoubtedly, the biggest news in the crypto trade industry for September is China’s blanket ban on all digital currency. The Chinese government declared that all cryptocurrency transactions would be considered illegal from this point onwards.
Being one of the largest crypto markets in the world, any change in stance of the Chinese Government has repercussions for the entire global crypto market. In the wake of the Chinese announcement, the Bitcoin price fell by more than $2000.
Even though trading cryptocurrency has been officially banned in China since 2019, plenty of online forums continued transactions through foreign exchange. But the Chinese government introduced stringent rules this year that would make it impossible for these trades to continue.
The announcement made on September 24, banning all cryptocurrencies, is the government’s most clear indication that they want nothing to do with the crypto trade. The decision was a long time coming. In May, state institutions told buyers that they would not protect Bitcoin buyers as the government promised to increase pressure.
In June, there was a decision informing banks to stop facilitating crypto transactions. The government also banned “mining” currencies to ensure the foundation for a complete shutdown of crypto trade would be in place.
Effects of China’s Crypto Ban
China’s decision to ban cryptocurrencies has a ripple effect on the entire world market. Here are some of the most important changes observed in the last few days:
Bitcoin Mining Takes a Hit
Not only is China one of the largest crypto markets in the world, but it is also one of the world’s main centers for mining cryptocurrencies. The nation has relatively low electricity costs and affordable computer hardware, which makes this possible.
Unsurprisingly, China’s blanket ban on cryptocurrencies has severely hit the currency mining industry. Back in September 2019, China’s Bitcoin energy use accounted for 75% of the world’s total. It fell to 46% by April 2021 and even further with the recent decision.
Price of Bitcoin
In the wake of the Chinese government’s announcement, Bitcoin prices fell by approximately 4% in just 24 hours. The price of Bitcoin is currently hovering around $43 020. Similarly, Ether fell by around 6% and is trading at approximately $2,973.
However, experts warn that this immediate drop is not the biggest cause of concern for investors. Such a drop is only natural, given the circumstances. Investors should instead worry about the long-term effect this decision may have on market volatility.
Potential Impact on Other Nations
The concern that plagues most investors is the possibility that the U.S. financial apparatus may emulate the Chinese decision. The United States has recently taken a more aggressive stance with crypto enforcement and views crypto, especially around regulation of the crypto markets
With a crypto giant such as China introducing such stringent measures to control Bitcoin, no wonder investors are worried that another crypto giant, the United States, could also take similar steps although that is highly unlikely.
Adoption of Bitcoin in El Salvador
El Salvador did the exact opposite of China’s decision to ban cryptocurrencies; the government recognized Bitcoin as legal tender. However, the rocky rollout of the decision had an immediate and massive impact on the market.
Falling from a high of $5300, Bitcoin crashed in the wake of El Salvador’s decision to adopt Bitcoin’s usage legally. What’s more, the general downward trend affected other cryptocurrencies as well, such as Ether, Dogecoin, and Cardano.
Since then, the trade has recovered. In the first 24 hours of the government’s implementation of the new law, the crypto market value fell by nearly $400 billion worldwide.
Analysts and experts argue that the sudden and debilitating drop was potentially due to overvaluation at that time. The market had been running on a high in the week leading up to El Salvador’s law, and Bitcoin was potentially overvalued.
There were no significant pullbacks from the market due to the high value of Bitcoin, and the sudden rollout by EL Salvador may have pushed the market overboard and sent prices tumbling.
Suspension of Several Crypto Exchange Services in South Korea
Not only China, but South Korea too witnessed changes in the crypto market. The South Korean crypto market found itself in a difficult position in the last month. More than 60 crypto exchanges had to inform users that they would be suspending their services, either partially or fully.
This was a decision taken to avoid the effects of a new regulation that required exchanges to register with the Financial Intelligence Unit and partner with banks to guarantee real-name accounts.
Those that didn’t stick to the new regulations had shut down their services by September 24.
The crypto world went through some significant changes in the month of September. Unfortunately, the prediction made by investors at the beginning of the month proved to be wrong. The “September Effect” persisted even this year in the crypto industry.