Chinese state media warns against cryptocurrency as bitcoin rallies

Bitcoin’s recent rally has sparked renewed warnings from Chinese state media about the risks of investing in cryptocurrencies, as interest around digital assets remains strong in the country despite a sweeping ban on crypto mining and trading.

A rebound in bitcoin prices cannot “hide” the underlying risks of the digital asset, state-owned newspaper Economic Daily said on Sunday.

Wild fluctuations in bitcoin value remain the norm, and cryptocurrencies have yet to enter the mainstream, the article said, adding that regulatory scrutiny of the market remains tight. Investors should maintain a “clear and rational” mindset, it said.

The caution comes after the world’s largest and most valuable cryptocurrency gained nearly 45 per cent in February, reaching its highest level since November 2021.

The combination of factors sent bitcoin’s value to over US$62,500 last Wednesday. And despite a mild drop since then, the cryptocurrency is still trading at 40 per cent higher than the beginning of the year.

The jump in prices sparked surging interest from internet users in mainland China, where a community of cryptocurrency enthusiasts remains active despite the government’s rigid stance against the digital asset.

Bitcoin became a trending search last week on multiple Chinese online platforms, including microblogging site Weibo. The term’s popularity increased more than fourfold on the multipurpose app WeChat.

Interest in conducting secret bitcoin trades also appears to have grown in China, as the country’s stock market extends a slump amid an economic slowdown, according to a report by Reuters in January.

Chinese social media all agog as bitcoin prices continue to surge

Chinese state media has persistently tried to dissuade people from engaging in cryptocurrency-related activities, as authorities cited risks of capital flight and financial instability.

In September 2021, 10 government bodies escalated the country’s crypto ban by jointly declaring a broad range of cryptocurrency-related activities as illegal financial activities.

In the same year, executives at Blockchain-based Service Network, a state-backed Chinese initiative pushing for the commercial adoption of blockchain technology, called cryptocurrencies “the biggest Ponzi scheme in human history”.