How investors should react to news of China shutting down all crypto activity

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Jon Najarian joins the Halftime Report to discuss China’s new crackdown on digital currencies. Bitcoin stock plunged after this morning’s announcement. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Bitcoin and ether tumbled Friday, with traders rattled by tough talk out of China.

The price of bitcoin fell about 5% to $42,496.12, according to Coin Metrics data. Ether, the second-largest digital currency, dropped 7% to $2,921.53.

It comes after the People’s Bank of China said in a Q&A that all crypto-related activities are illegal. Services offering trading, order matching or derivatives for virtual currencies are strictly prohibited, the PBOC said, while overseas exchanges are also illegal.

Beijing has cracked down sharply on crypto this year. The Chinese government moved to stamp out digital currency mining, the energy-intensive operation that validates transactions and produces new coins. That led to sharp slump in bitcoin’s processing power as miners took their equipment offline.

The PBOC banned banks and non-bank payment institutions like Alibaba affiliate Ant Group from providing services related to virtual currency. In July, authorities told a Beijing-based software company to shut down over its involvement with crypto trading.

Constantine Tsavliris, head of research at crypto data site CryptoCompare, said the harsh rhetoric was likely to result in a “short-term sell-off as negative news presses investors to take a conservative approach.”

“The recent news by China serves as an extension of previous announcements in May regarding a crackdown on cryptocurrency mining and bans on financial and payment institutions from crypto-related services,” Tsavliris told CNBC.

“As a result of the bans, we previously saw a short-term sell-off and a shift in mining away from China, followed by a swift recovery throughout July and August,” added.

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Comments

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In few months or no time people will definitely start kicking themselves in regret for missing the opportunity to buy or invest in cryptocurrency.

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Wouldn't this make cryptocurrency more rare because there are less people mining it.

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Sunny Gill says:

India banned first and now China. Don’t know how long will this ponzi scheme work😂

Allwell Clinton says:

But why would they do such a thing

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I've yet to see crypto be of any practical use for everyday people. Maybe for sending money to/from 3rd world countries and for illegal activities.

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People will be kicking themselves in few weeks if they miss the opportunity to buy and invest in Crypto as it's retracing….BE WISE

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The programming never stops.. notice how they always say what YOU should do with your money.. lol

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There are multiple warnings this last week in all Australian papers from CBA and IMF about house prices here. They are very worried, and I know they don't care about individual lenders, only the system. I believe they know something is on the finacial horizon and people are seriously struggling to keep up with repayments as it is.

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