Bitcoin’s meteoric rise to nearly $20,000 in December 2017 had investors euphoric—until reality hit. By early February 2018, its price had plummeted to under $7,000, as a global crackdown on cryptocurrency trading took hold. Leading the charge? China, South Korea, and India.
China: A Total Crackdown on Crypto
China had already taken steps against crypto in September 2017, banning domestic exchanges and Initial Coin Offerings (ICOs). However, by early 2018, Beijing escalated its war on digital currencies by:
- Blocking foreign cryptocurrency trading platforms through the Great Firewall.
- Banning crypto-related ads from search engines like Baidu and social media platforms like Weibo.
- Forcing banks to step up monitoring of transactions related to cryptocurrency.
China’s rationale? Preventing financial risk and maintaining capital control.
South Korea: No More Anonymity, No More ICOs
South Korea, a hub for cryptocurrency trading, also tightened regulations in early 2018:
- ICO ban: The government prohibited Initial Coin Offerings, citing fraud concerns.
- Anonymous accounts outlawed: Cryptocurrency deposits into anonymous bank accounts were blocked, forcing traders to reveal their identities.
- Government concerns over speculation: With everyday citizens, from college students to housewives, jumping into Bitcoin trading, South Korea feared a growing crypto gambling addiction.
India: A Warning and Possible Ban
While India hadn’t fully outlawed cryptocurrency, the government made its stance clear:
- Bitcoin would not be recognized as legal tender.
- A potential ban loomed on using Bitcoin and other cryptos for illegal transactions.
- Regulators cracked down on exchanges to prevent crypto from infiltrating the official payment system.
Bitcoin’s Market Meltdown
With major economies cracking down, Bitcoin suffered a brutal price correction:
- From $20,000 in December 2017 to below $7,000 in February 2018
- Investor panic triggered mass sell-offs, wiping out billions in market value
- Fear, uncertainty, and doubt (FUD) spread across the crypto world
While U.S. regulators were more lenient, they had also begun targeting fraudulent ICOs and crypto scams, signaling that Bitcoin’s golden age of unregulated trading was over.
What’s Next for Bitcoin?
Bitcoin may be down, but it’s not out. As governments tighten regulations and enforce stricter oversight, the crypto industry faces two choices: adapt to new legal frameworks or risk further crackdowns.
One thing is clear: the days of Wild West crypto trading are over.