Chinese state media has issued fresh warnings regarding the risks of investing in cryptocurrencies. Bitcoin's recent surge reignites interest in digital assets within the country despite stringent regulations banning crypto mining and trading.

Cautionary Tone from Economic Daily

According to the state-owned newspaper Economic Daily, the rebound in Bitcoin prices should not obscure the underlying risks associated with the digital asset.

The publication emphasized that wild fluctuations in Bitcoin's value persist, and cryptocurrencies have yet to achieve mainstream acceptance. Moreover, regulatory scrutiny of the market remains stringent, underscoring investors' importance in maintaining a clear and rational mindset.

Factors Driving Bitcoin's Rally

Bitcoin's recent surge, which saw its value rise by nearly 45% in February, has been attributed to various factors. The launch of spot Bitcoin exchange-traded funds in the United States in January has contributed to the momentum and anticipation surrounding Bitcoin's upcoming "halving" event expected in April.

A South China Morning Post report says this event will reduce the reward for mining new Bitcoin by half, slowing its release into the market.

Despite a mild decrease in value since reaching its peak last Wednesday, Bitcoin continues to trade at a 40% higher valuation compared to the beginning of the year.

Persistent Warnings Against Cryptocurrency Activities

Chinese state media has consistently discouraged participation in cryptocurrency-related activities, citing concerns about capital flight and financial instability. In September 2021, 10 government bodies jointly declared a broad range of cryptocurrency-related activities as illegal financial activities, escalating the country's crypto ban.

According to Crypto News, in 2023, Binance users in China were reportedly involved in cryptocurrency trading, totaling approximately $90 billion within a month, constituting roughly 20% of Binance's total global trading volume. During this period, it is estimated that there were over 900,000 active Binance users in China.

In 2022, amidst a plunge in cryptocurrency prices following several company failures, the Economic Daily cautioned that Bitcoin's value, which it described as "nothing more than a string of digital codes," could revert to its "original value" of zero.

Furthermore, executives at the Blockchain-based Service Network, a state-backed initiative advocating blockchain technology's commercial adoption, labeled cryptocurrencies "the biggest Ponzi scheme in human history."

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