As concerns continue to build about the repression of cryptocurrencies in China, the tolls are visible in the market as crypto opinion leaders have their accounts blocked.
After the news of “Key Opinion Leaders” (KOL) accounts being banned on Weibo, the price of Bitcoin (BTC) and various other cryptos took a sharp dip. The Fear, Uncertainty, and Doubt (FUD) cast on crypto by the Chinese government has released quite a few Bitcoins from individuals fearing to lose their money.
Social Media-Inspired Volatility
When reports of the blocked accounts hit around 5:30am ET (about 9:30 UTC), it triggered a drop in the price of most major cryptocurrencies. The plunge seen in the following price chart of Bitcoin starting at that time sent ripples through various other major cryptocurrencies.
This is not the first time China’s social media platforms have purged influential accounts related to cryptocurrency. In 2019, Weibo banned the accounts of Binance co-founder Yi He and cryptocurrency entrepreneur Justin Sun.
However, does banning a few Weibo accounts actually mean anything? As of less than a week ago, the US also had a ban on crypto advertising on social media, which it has only recently revised.
Beijing’s Logic
According to the South China Morning Post last month, Liu He, Chinese President Xi Jinping’s top economic adviser, said the government would “crack down on Bitcoin mining and trading behaviour, and resolutely prevent the transfer of individual risks to society”. The Chinese government’s reasoning is that one of the risks cryptocurrencies pose is how easily the market can be influenced by individuals.
As Colin Wu, a Chinese journalist who runs a cryptocurrency news site, posted to Twitter: “The accounts blocked by the Chinese government are mainly recommending investment and trading crypto to retail investors.”
“The government makes it clear that no Chinese version of Elon Musk can exist in the Chinese crypto market,” says NYU Law School adjunct professor Winston Ma.
This shows the Chinese government doesn’t need more uncertainty than influencers already bring to the table.
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