A surge in the bitcoin market has begun the new year. The value of the global cryptocurrency market has risen back beyond $900 billion, and most cryptocurrencies are currently trading at greater prices than they did at the end of 2022. There have been rumors that China may reopen doors for the cryptocurrency business given the upbeat market outlook and a number of kind actions taken by the Xi Jinping administration.
Is China reintroducing cryptocurrency?
In light of encouraging US inflation news, the cryptocurrency market experienced a significant increase. The cryptocurrency market is searching for the next story to spark a bull run as rumors about the Federal Reserve reducing the pace of interest rate increases proliferate. This is the chance that China will lift its ban on cryptocurrencies.
China is reopening after three years of harsh COVID restrictions. The Xi Jinping administration has also taken actions to help the financial markets, and the government is relaxing restrictions. The government’s potential to change its policy on cryptocurrencies is causing the cryptocurrency community to become concerned.
In 2021, China outlawed cryptocurrency, which caused a market collapse. Hong Kong, however, has never shut its doors to the thriving digital assets market. In recent months, Hong Kong’s regulators have concentrated on developing a hub for cryptocurrency.
According to reports, there has been a discussion of a potential scheme that would permit citizens of China to access the crypto market due to the development of the cryptocurrency business in Hong Kong. Given the unfavorable developments in the cryptocurrency market in 2022, such as the FTX meltdown, this might not happen.
Concerns exist regarding the energy requirements of cryptocurrency mining operations. Additionally, retail traders who enter the market without sufficient risk management measures are at risk from the speculative trading of volatile crypto assets.
However, if China loosens its limitations even somewhat, it might serve as the impetus for the subsequent crypto bull run as investors will have a fresh narrative on which to base their hopes on. Prior to the 2021 prohibition, China had the world’s largest cryptocurrency market, with a lion’s share of cryptocurrency mining and trading.
China’s return to cryptocurrency is fueled by Justin Sun.
The crypto community is becoming increasingly optimistic that a return to China is feasible thanks to one of the well-known figures on the crypto Twitter, Justin Sun. Sun is credited with creating the Tron blockchain. Prior to the 2021 ban, Huobi was China’s largest cryptocurrency exchange. He also joined Huobi’s worldwide advisory board.
Sun stated that he would be a long-term partner to the development of the country when China started to loosen limitations and open up. Although Sun did not specify digital assets, he is probably advocating for the country’s reintroduction of the cryptocurrency market.
Although there have been rumors that the cryptocurrency business may return to China, this is less likely to occur. However, cryptocurrency bulls are certain that declining inflation and impending developments, like the Ethereum Shanghai upgrade, will lead to the next increases.
