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Bitcoin falls again as China reiterates crackdown

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Bitcoin erased some of its gains in early Friday trading as China reiterated its call for a crackdown on mining and trading.

Video Transcript

JULIE HYMAN: We have to get another look at crypto right now because China is now reiterating its call for a crack down on Bitcoin mining and trading. We are hearing that from Vice Premier Liu He, who is making these comments. And it's definitely affecting cryptocurrencies. Jacob Blikre back with us on what is happening there. So Jared, this is something they said earlier in the week. But they're saying it again and, I guess, with more detail.

JARED BLIKRE: Yeah, and to be fair, they said it in 2017. This is really nothing new, but I would say the rhetoric in terms of governments coming out, talking negatively about cryptocurrencies has been on the rise recently. So the Financial Stability and Development Committee-- you noted that it is chaired by Vice Premier Liu He-- they said that they're going to crack down on crypto trading in the country and that they are going to, quote, "resolutely prevent and control financial risks."

So we're seeing the reaction here. Bitcoin sold off quite heavily on the announcement. Was around 40,000-- now you can see it's around 38,000, 37,000. So definitely a developing situation here. And let's check out some of the other coins here. We've got Ether-- that's down about 16% right now. Dogecoin, got to check that out. That's down 15%, 16% as well. So within the crypto space, really seeing some losses here on this news.

And it was only yesterday that Fed Chairman Jay Powell, he was talking about stablecoins. And one of these stablecoins is Tether. Now you're not going to see a reaction in this. It's pegged to the dollar. But my point is, we've been hearing a lot of different comments from a variety of sources. So not only China, it's a Treasury Department with respect to taxes and reporting transactions over $10,000. You have the financial stability council here over in China. And then you have a Fed Chair Powell.

So all of this put together, it looks like there's going to be some headwinds for crypto going forward. And you got to wonder, is this Bitcoin ETF in the US ever going to happen? Gary Gensler has a very full plate right now. And Bitcoin volatility in the past has slowed down the SEC efforts to get that-- the approval process for these Bitcoin ETFs. And there's now more than a dozen of these sitting in front of Gary Gensler and his crew. So, a developing situation here, and not the best news for crypto.

JULIE HYMAN: Yeah, that's a really interesting and good point on ETF. I would ask, though, on the other items. I mean, China, as you pointed out, it's not new. And it's sort of-- I'm sort of curious what effectively would change for the crypto market as a result of these measures they're talking about. And similarly, in the US, that cash transactions rule really just brings Bitcoin into line with cash, with dollars. And so, again, I wonder if we're looking at any kind of an overreaction here in these markets.

JARED BLIKRE: You know, it could be the case. All I've noticed is that these headlines, they're kind of clustering right now. And as you said, this is really nothing new. You could have seen this coming from a mile away because there's been this rhetoric around for years. But it's only, I would say, within the last few days to the last week. And I think it's been correlated with Bitcoin volatility that when the regulators see these things happening, they just kind of take a step back.

And no one's saying that Bitcoin is going to pose a systemic risk to the financial system. But there was so much interest when Bitcoin was hitting 63,000, when Ether-- Ethereum was hitting 4,000, 4,500, that they probably have to stand back and think a little bit. Because China has their own digital currency now. And it's heavily tracked. And guess what? Cryptocurrencies compete with that. And then you combine that with Powell's statements about the stablecoin. These are currencies. So they are, in fact, competition for the Fiat currencies that we live with and pay our taxes in. Just an interesting situation here, so we'll be on alert for some more headlines over the next few hours.

JULIE HYMAN: Yes, we will and tweets, for that matter. You never know. All right, thanks so much, Jared, for hopping on to bring us this breaking news. Appreciate it.