Bitcoin (BTC -0.37%), Ethereum (ETH -1.26%), and Dogecoin (DOGE -1.92%) are down 11.69%, 17.41%, and 14.65% in the past seven days. They are now trading at $41,814.38, $2,856.90, and $0.2159 per coin, respectively, as of 9:54 a.m. EDT. Regulatory crackdowns and a short-lived broad stock market sell-off sent cryptocurrency prices plunging before recouping most of their losses earlier in the week.
But on Sept. 24, the People's Bank of China, the country's central bank, issued a proclamation stating that all cryptocurrency activity is illegal. The entity specifically called for an outright ban on overseas exchanges operating in China, as well as trading services, crypto-brokerage platforms, new token offerings, and cryptocurrency derivatives. Earlier this year, China had begun cracking down on Bitcoin mining, citing energy concerns. Over 50% of all global Bitcoin mining activity took place in China at that time, and the measures sparked a 50% drawdown for Bitcoin and other major cryptocurrencies from May to July.
Chinese investors love Bitcoin, Ethereum, and Dogecoin, as these major cryptocurrencies represent the only way for them to transfer their hard-earned wealth abroad, bypassing the country's stringent capital outflow requirements. In fact, Chinese citizens are allowed to purchase only up to $50,000 worth of foreign currencies every year at state-affiliated or private banks. Last year, over $50 billion worth of capital fled Chinese-based wallet addresses into other parts of the world.
When investors place orders for millions or even billions in cryptocurrencies, they inevitably boost its price, as supplies are very limited. For example, approximately 20% of Bitcoin's circulating supply of 18.8 million is already lost due to factors like human error or losing wallet keys. The remaining supply is spread across more than 413 exchanges and 70 million wallets across the world. So the loss of buying activity from Chinese investors is a pretty big inhibitor for crypto price appreciation.
Luckily, the Chinese government has stopped short of banning the ownership of cryptocurrencies. So there's a lot of loopholes surrounding the current regulations. What's more, keep in mind that the cryptocurrency industry is a global market and that countries like the U.S., India, Pakistan, Bangladesh, Venezuela, and Nigeria have far higher rates of crypto adoption than China. In addition, most Chinese miners have fled and resettled. Out of all places, they are now comfortably harvesting BTC with their rigs in the Lone Star State while enjoying a warm Texan welcome.
Exciting developments are happening to these three cryptos as well. In November, Bitcoin's Taproot upgrade in November will enable programmable transactions (smart contracts) that automatically execute on its blockchain, enabling investors to use their coins to access the vast depth of the decentralized finance sector. The total addressable market of DeFi services has already surpassed $167 billion this year.
Speaking of the matter, Ethereum has the largest market share in the space, powering tax-favorable non-fungible tokens, crypto borrowing and lending, various methods of earning fixed income, and more. Finally, the Dogecoin network has rapidly evolved into blockchain, where it can satisfy users and miners alike. So if anything, this looks more like an opportunity to buy the dip than like time to say goodbye to your holdings.