At the beginning and middle of September, the world of cryptocurrencies was massively shaken by measures of the Chinese central bank. After the prices of the various cryptocurrencies, above all Bitcoin, had crashed massively, it's time to take a look at how they coped with this hard blow.
China intervenes massively in the market of Bitcoin and Co.
On Friday 1 September, at a time when most of the crypto currencies were at a historic high, initial assumptions that the Chinese central bank could intervene in the market for digital currencies with drastic measures caused initial uncertainty among market participants. This started a turnaround that continued on the following Monday, when all new ICOs for crypto currencies in China were declared illegal. The big slump occurred on 13 September, when it became clear that trading in crypto currencies such as bitcoin in China will not have a bright future, at least for the time being. Initially, all platforms active on the Chinese mainland were banned from accepting new users for crypto currencies. As a further step, they will have to cease trading completely from 20 September.
During this period, the bitcoins exchange rate fell by approx. 40% from around USD 4,863 to just over USD 3,000. The background to the Chinese measures was official suspicion of fraud against various platform operators, which undoubtedly exacerbated the uncertainty among investors. As a result, it was also announced that the measures in China had not yet been completed and that further measures would follow. Initially, however, nothing was known about the exact scope of these measures. The events in China showed that while crypto currencies are not regulated by state supervisory authorities, they can still intervene massively in the market. The British regulator FCA's warning of ICOs and a statements by the head of the major US bank JP Morgan, who called Bitcoin a bubble and possible fraud, also had a negative impact on the investor sentiment.
The Bitcoin exchange rate develops astonishingly after crash
After all these events, it was obvious that the meteoric rise of bitcoin and other crypto currencies had come to an abrupt end. However, it turned out that the share price was unable to break through the USD 3,000 mark downwards. On the contrary, he returned to the road to success relatively quickly. It only took a few days for Bitcoin's exchange rate to make the turnaround, scratched back at the $4,000 mark and finally surpassed it again in a seemingly sustainable manner. This turnaround was less pronounced for other crypto currencies such as Litecoin or Ethereum, but they too can post an increase of several 100% in the course of the year.
This development shows that users' confidence in crypto currencies remains extremely high. This confidence, and the lessons learnt from the events that have taken place in China, make it probable that future interventions by state authorities in the crypto currency market cause a reaction, but the reaction will probably not be as dramatic as after the events in China.