Wasting no time, crypto bulls already see last week’s banishment of crypto trading by the Chinese government as a boon to the emerging sector. Speaking at Yahoo Finance’s Crypto Investing Summit this week, the investor and podcaster, Anthony Pompliano, echoed the sentiment of many longtime investors of the asset class.
The Chinese government banned cryptocurrency activities at least 5 different times before last week, with this most recent action making crypto trading or offering any crypto-related services to Chinese citizens a financial crime. (Here’s the official statement from Chinese regulators.) Since the announcement, reports indicate that an exodus like what happened to the country’s crypto mining companies back in May is now underway for crypto companies in violation of the law.
Two of the world’s largest cryptocurrency exchanges, Binance and Huobi, both halted registrations for new China-based customers over the weekend.
But Pompliano views the crackdown as a positive development, not only for the crypto sector but also for the U.S. economy.
“This is the most American technology that we have today, similar to the internet,” Pompliano told Yahoo Finance. “China is making a massive geopolitical mistake here. Now it’s up to the United States… If someone is going to benefit from this technology, we better make sure it’s us.”
After dropping from $45,000 on the news to just below $41,000, bitcoin – now hovering above $42,000 – and other major cryptocurrencies show signs of recovery. Bitcoin (BTC-USD), Ethereum (ETH-USD), Binance’s exchange coin BNB, and Solana (SOL1-USD) all show improvement over the last 24 hours, while Cardano (ADA-USD) and Ripple remain in the red.
To be sure, all of these assets sold off at the beginning of the week. To assume the crypto sector will not see some price reflection from losing Chinese customers is wrong.
Crypto trading on the decline in East Asia
In light of these concerns, however, geographic data from the blockchain analysis firm, Chainalysis, indicates that East Asia, a region which China dominates, already saw a decline in the growth of its crypto trading relative to other parts of the world.
Over the past year, global crypto transaction volume in North America and a portion of Europe outpaced East Asia, a region which generated the majority of crypto volume the year before. Between January 2020 and July 2021, East Asia’s share of worldwide transaction volume fell from 31% to 14%. Though the raw volume of this region still grew, it happened at a much lower rate than the previous year relative to other parts of the world.
Despite China’s previous regulatory bans, many investors were concerned about how the country might use crypto to their advantage. For instance, China previously dominated both operations and manufacturing for the crypto mining industry to such an extent that some worried the nation might one day take majority control of bitcoin’s network.
As recently as April of…