Recurring market commentary on what's happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.

Market commentary

Good Morning!

Regulatory clarity is closely linked to the institutional adoption of crypto/digital assets.

China bans crypto again

What happened on Friday after the news came out that the CCP (China Central Party) was allegedly banning all crypto-related transactions and labelling them as illegal was in fact not new “news”. See the following Twitter thread of Matthew Graham (CEO of Sino Capital):

my current and best understanding is this is not a change in regulatory policy however it is a notice that is newly posted on the PBOC website pic.twitter.com/8r0FcxsROA
— Matthew Graham (@mattyryze) September 24, 2021

It is also worthy to note that China has been banning crypto for several years now. John Street Capital put a nice info wall together where you can see the timeline of the various actions taken (2013, 2017, 2018, 2019, and 2021). The price corrections were smaller after every announcement.

Now, let me reference back to my initial point: regulatory clarity is closely linked to institutional adoption.

Global crypto regulation

China has made it clear that it is not in favour of crypto. At least they have provided regulatory clarity in their jurisdiction. I do not regard China as a trendsetter, and therefore I do not see there being a very high risk that other regulators will follow suit. The reason why prices are still reacting negatively to the news is that the overall crypto market loses buying power when Chinese retail investors are banned from it.

In general, we need to keep an eye out for emerging markets with similar capital restrictions (non-free floating currencies) like China, and follow their progress. In addition, we (obviously) also need to watch the decisions made by the US and Europe.

Also, it is important not to forget that we should not underestimate the power of retail investors. If regulatory clarity moves forward for this segment and many of the emerging market countries citizen start to flip some of their earnings into crypto (instead of into black market US dollars), prices will go up despite the lack of institutional investors.

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