The Central Bank of China declares all cryptocurrencies and their related transactions illegal

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“Activities related to cryptocurrencies are illegal“the Chinese central bank has ruled in a notice on its website.

The reaction in the market has been violenta, although the volatility in these assets is so great, it has not been too surprising since sometimes, even for no apparent reason, they move in a similar proportion.

Specifically the bitcoin which this morning reached 45,200 dollars has fallen in a few minutes to 43,000 and then has continued to fall to a low of 42,100.

At the moment it is at 42,400 although its movements are so fast that in a minute it can be 200 dollars higher or lower.

More violent was the reaction of the ethereum which fell from 3,165 to 2,840, and is now hovering around $ 2,870.

China against crypto

This violence in movements It is not at all strange in these assets but it is curious that a few days after a country adopts bitcoin as its official currency (El Salvador), which is destined to be the first world power in a short time, it practically makes it illegal.

The Chinese government war on crypto It is not new, although it continues to be one of the countries where most of them are mined (created).

In fact, much of the environmental criticism against the mining of cryptocurrencies are based on the fact that in China a large part of the electrical energy that is used to create them comes from burning coal.

Nothing changes technically

Regarding bitcoin, from a technical point of view there is nothing remarkable for our Invertia analyst, Eduardo Bolinches, who is only seeing one resistance at $ 45,000 for having previously acted as support at the end of the first fortnight of this month.

Now it will be time to be very attentive to what happens with the current support at 40,680 dollars, especially during the weekend, which is when this cryptocurrency has the highest volatility.

Losing that level, he claims, would imply continuing with the corrections towards the next support at $ 38,120.

Controversy is always present

Even the most skeptical have already convinced themselves of the importance of bitcoin as an asset. However, there are still many doubts about its real usefulness, which awakens, beyond discussions – very emotional – in social networks and forums, debates among prestigious economists.

For example, the Columbia University professor, Willen H. Buiter, believes that it is only a speculative asset with very high volatility (more than ten times higher than that of the most common currencies) and that therefore it does not serve as a store of value.

To understand this aspect you have to think of, for example, a Salvadoran who does not trust the currency of his own country and to protect yourself from depreciation, buy bitcoin. If it didn’t exist – most still do – I’d buy dollars.

The difference is that your savings can move -also downward- ten times more invested in the cryptocurrency, than invested in dollars. And sometimes these movements occur, as we have seen, in minutes.

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