Crypto

Bitcoin Takes a Hit after China Threatens “punitive steps” to Deter Crypto Mining

US market futures fell on Tuesday as investors weighed the outcome of a critical meeting between US President Joe Biden and Chinese President Xi Jinping, while cryptocurrencies were battered by Beijing’s threats.

Futures on the S&P 500Nasdaq 100, and Dow Jones dipped 0.1-0.2%, mirroring Monday’s softer tone on the benchmark indices, but were still within striking distance of November’s record highs.

During hours of meetings on Monday, Biden and Xi emphasised the need of avoiding war.

As quoted by Reuters, Biden said,

“It seems to me our responsibility as leaders of China and the United States is to ensure that our competition between our countries does not veer into conflict, whether intended or unintended.”

The world’s two largest economies are at odds on a number of crucial topics, including trade, China’s pressure on Taiwan, and the origins of the COVID-19 outbreak.

Jim Reid, the Deutsche Bank strategist, said,

“It’s now over, with the first press statement from the White House a pretty bland reflection of topics covered at the meeting without suggesting any major announcements are likely.”

“There have been no mentions of tariffs being discussed, but we’ll likely hear more detail, later on, so keep your eyes peeled on the screens for that.”

He added,

“At first glance, it seems like it was a co-operative meeting, but with little of substance likely to have come out of it. We will see.”

The offshore yuan rose to a five-month high against the dollar on Tuesday, indicating rising investor confidence in the strength of US-China ties. Because of the strong currency, the Shanghai Composite closed at 0.3 percent lower, while the Hang Seng in Hong Kong gained 1.3 percent.

After hitting new highs a week earlier, the MSCI All-World index was last trading flat on the day. The Stoxx 600 index in Europe increased 0.2 percent after hitting all-time highs earlier on to increases in telecoms, banks, and tourism sectors.

Data slightly moved the UK blue chips, showing a quick pick-up in the British labor market, that could encourage the Bank of England to increase interest rates very soon. The FTSE 100 was last flat on the day, while sterling raised by 0.3% against the dollar and the euro.

Another inflation-centric rise in government bond yields took some wind away from the equity market’s sale. The most sensitive US 2-year Treasury yields have been cranking higher for the last couple of months. Now, they are at their best since March 2020, yielding 0.524% unchanged on the day.

Athanasios Vamvakidis, Bank of America strategist, said,

“The market was very surprised by the very strong inflation print in the US last week.”

“We expect the Fed to change its communication to a more hawkish tone. The Fed will have to prepare markets for an earlier and faster-tightening cycle, in our view.”

Biden, on Monday, signed a huge $1 trillion infrastructure bill into law, that brought fresh federal money for roads as well as bridges, and a boost to the crypto market.

Moreover, the Chinese government, as indicated by a Bloomberg report, warned state firms about cryptocurrency mining and mentioned that it was considering to take punitive steps.


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