The People's Bank of China reiterated its regulation of virtual currencies, putting short-term pressure on Bitcoin but showing signs of accumulation.

TL;DR

The People's Bank of China held a multi-departmental coordination meeting on November 28-29, 2025, reinforcing its regulatory stance on virtual currencies after a three-year hiatus, and specifically warning of the risks associated with stablecoins. The market reacted sharply on December 2nd, with Bitcoin falling to a low of $83,989 before quickly rebounding above $90,000. Technical analysis suggests a probability of testing the $88,000-$84,000 support zone in the short term, but on-chain data shows strong accumulation signals (a net outflow of 14,666 BTC over 7 days), and social sentiment has not turned to panic. Overall assessment: Short-term consolidation and bottoming out are expected, with the risk of a deeper decline manageable.

Core Analysis

Details of the regulatory incident

Issuing organization and time

On November 28, 2025, the People's Bank of China, together with 13 other departments including the Ministry of Public Security, the Cyberspace Administration of China, the Central Financial Stability and Development Office, the Supreme People's Court, the Ministry of Justice, and the China Securities Regulatory Commission, convened a meeting of the "Coordination Mechanism for Combating Virtual Currency Trading and Speculation." The meeting's statement was released on November 29, with major media reports concentrated on December 1. On December 5, seven industry associations, including the China Internet Finance Association, jointly issued a supplementary risk warning.

Key points

• Reiterating the 2021 ban : Virtual currencies have no legal tender status and cannot be circulated or used in the market; related business activities (exchanges, token issuance, derivatives, etc.) are all illegal financial activities.
• A special warning for stablecoins : For the first time, it explicitly points out that stablecoins, due to the lack of customer identification and anti-money laundering measures, pose high risks such as money laundering, fundraising fraud, and illegal cross-border fund transfers.
• Strengthening law enforcement coordination : A commitment was made to deepen cross-departmental cooperation, enhance monitoring of information and capital flows, and severely crack down on illegal and irregular activities.

Compared with three years ago

Historical Regulatory Context

China's regulatory policies on virtual currencies have undergone several upgrades: in 2013, Bitcoin was banned as a means of payment; in 2017, ICOs and fiat currency exchanges were banned; and in 2021, a complete ban was implemented. This reiteration in 2025 comes against the backdrop of Hong Kong's advancement of its crypto regulatory framework (passing the stablecoin bill in May and approving Bitcoin/Ethereum ETFs), highlighting the regulatory demands regarding policy differences between the mainland and Hong Kong.

Market Immediate Reaction

Price fluctuation timeline

Liquidation and Chain Reaction

• On December 2nd, the total market liquidation exceeded $400 million, and Bitcoin's intraday low touched below $85,000.
• Hong Kong-listed crypto stocks plummeted: Yunfeng Financial fell over 10%, and OSL Group fell over 5%.
• The price decline was influenced by multiple factors, including expectations of an interest rate hike by the Bank of Japan, and was not driven by a single regulatory event.

signs of recovery

The rapid rebound to the $91,000-$93,000 range on December 3-4 indicates a stronger ability of the market to digest such regulatory reiterations, contrasting with the months-long downward trend following the 2021 ban. As of December 5, prices stabilized around $90,600, rebounding more than 7% from the low.

Technical Analysis

Multi-period technical indicators

Short-term (1 hour)

• RSI(14) : 32.01 — Approaching oversold territory, suggesting a short-term rebound window.
• MACD : Value -391.80, Signal -260.40, Histogram -131.39 — Bearish momentum dominates.
• Bollinger Bands : Upper band $92,950, Middle band $91,936, Lower band $90,921 — Price is close to the lower band, volatility is contracting.

Mid-term (4-hour/daily chart)

• 4-hour RSI : 45.10 (neutral to bearish), MACD histogram: -265.71 (bearish crossover)
• Daily MACD : The histogram has turned positive to +1,008.04, suggesting a possible bullish divergence and signs of weakening bearish momentum.
• Daily Bollinger Bands : Lower band $84,365, middle band $89,879 — Price is near the middle band, there is still room for further decline.

Long-term (weekly chart)

• Weekly RSI : 39.17 — Approaching oversold levels; historically, this area has often formed significant support.
• Weekly MACD : Histogram -3,799.60, negative value expanding, confirming a medium-term correction trend.
• Weekly Bollinger Bands : Lower band $88,675 — Current price has touched this area.

Key price levels and liquidation risk

Probability assessment of downward movement

• Probability of short-term test below $90,000 : High (supported by technical indicators; a second dip is possible after a rebound from oversold conditions on the 1-hour RSI).
• Probability of reaching $88,000-$87,500 : Medium (weekly support and liquidation magnetic field overlap, multiple defenses need to be broken)
• Probability of a significant drop below $84,000 : Low (Daily MACD divergence, strong on-chain accumulation signals)

Derivatives Market Situation

• Total open interest : $58.94 billion, down 1.78% in the last 24 hours, indicating a deleveraging process.
• Funding rates : Binance +0.0025% (long position payable), Bybit -0.0003% (short position payable), overall neutral to bearish.
• 24-hour liquidation : Total $105.64M, of which longs accounted for $86.34M (82%) and shorts accounted for $19.30M — highlighting the vulnerability of the longs.

On-chain data analysis

Exchange liquidity changes

7-day net capital outflow (November 29 - December 4)

Key Interpretation

• Net outflow continued : Net inflows occurred only on December 1st (the first day of the regulatory news report), with continuous outflows at other times.
• Large withdrawals : On December 4th, 5,189 BTC flowed out in a single day, the highest in 7 days, indicating large holders transferring funds from cold storage.
• Reserves declined : 30-day reserves decreased from 2,823,557 BTC to 2,768,232 BTC, a drop of 1.97%, signaling a tightening supply.
• Contrarian accumulation : Sustained outflows occur during periods of price pressure, a typical "panic accumulation" pattern.

Network activity and cryptocurrency distribution

• Average daily trading volume : 447,390 trades (November 29 - December 4), with a fluctuation range of 400,703-517,534 trades, maintaining a healthy level.
• Average daily active addresses : 471,991, peak 517,230 (December 1st), network participation is stable.
• The number of cryptocurrency holding addresses increased from 74,740,537 on November 29th to 74,818,300 on December 4th, a net increase of 77,763 (+0.10%).
• Distribution Concentration : No significant changes were observed in the distribution of cash holdings, with no signs of large-scale selling.

Accumulation vs. Allocation Determination

Multiple on-chain metrics point to the accumulation phase :

1. Net outflow of 14,666 BTC and a decrease in reserves of 13,477 BTC.
2. The number of cryptocurrency holding addresses continues to grow.
3. After a brief inflow on December 1st, the outflow trend immediately resumed.
4. There are no signs of selling pressure from institutions or whale.

Social sentiment analysis

Discussion popularity and topics

Chinese community

• Discussions surrounding the central bank's reiteration of the ban were significantly lower than in 2021 , with little interaction or discussion on Chinese-language platforms like Weibo and Twitter.
• Market participants are less sensitive to "Chinese bans," viewing them as known risks rather than new variables.
• The warnings about stablecoins have attracted attention within professional circles, but have not formed a mainstream narrative of panic.

International Community

The main narrative revolves around technical aspects and cyclical patterns, rather than regulatory drivers.

• Accumulation Opportunity Theory : View the $88,000-$89,000 range as a support level buying opportunity, not a signal of a sustained bear market.
• Institutional Allocation Theory : Emphasizing continued inflows into Bitcoin spot ETFs (despite a recent slowdown), institutional allocation demand has not reversed.
• Cyclical Warning : Some analysts (such as PlanC) have pointed out the uniqueness of this cycle, but have not explicitly turned bearish.

Key opinion leader perspectives

• Adam Back : He advises against selling on pullbacks, viewing declines as entry points for long-term holders and maintaining a "buy on dips" stance.
• Jack Mallers : Citing macro liquidity expansion (global central bank money printing), he emphasizes buying Bitcoin during periods of extreme panic.
• Bitcoin Magazine series : Continuously publishes content encouraging holding and self-custody, downplaying short-term volatility.

Emotional polarity judgment

Overall attitude towards "testing lower points again" :

• Bullish bias (60%): Viewing potential pullbacks as temporary, tradable accumulation windows.
• Neutral/Wait-and-see (30%): Acknowledges technical risks but has not formed a directional bet.
• Bearish Expectations (10%): A minority of voices warn of a deeper correction, but there is a lack of systemic panic.

In comparison with history

The social media sentiment triggered by the Chinese ban from May to July 2021 was characterized by extreme panic, prevalence of FUD (fear, uncertainty, and doubt), and a KOL shift in public opinion towards a bearish stance by influential figures. Following the reiteration of the ban in 2025, the community reaction was calmer, and the narrative focused on technical aspects rather than regulatory impact, indicating increased market maturity.

in conclusion

Short-term price outlook (1-2 weeks)

There is a technical probability that Bitcoin will test the $88,000-$87,500 range , driven primarily by the following factors:

1. Multiple technical indicators are bearish (1-hour/4-hour MACD is negative, weekly RSI is approaching oversold levels).
2. The $760M long position liquidation magnetic effect may trigger a chain of stop-loss orders.
3. Deleveraging in the derivatives market is not yet complete (open interest is declining, funding rates are neutral).

However, the likelihood of a significant drop below $84,000 is low , for the following reasons:

1. The daily MACD histogram has turned positive, indicating that the bearish momentum is weakening.
2. Net outflow of 14,666 BTC on-chain, exchange reserves decreased by 1.97%, supply tightened.
3. The number of cryptocurrency holding addresses increased by 77,763, with no large-scale panic selling.
4. Social sentiment has not fallen into the FUD cycle, and the market's immunity to Chinese regulatory news has increased.

Regulatory impact assessment

The People's Bank of China's reiteration this time has a fundamentally different market impact from the 2021 ban:

• 2021 : Global hashrate shift, miner selling pressure, and a downward trend lasting several months ($64,000 → $29,000)
• 2025 : Rapid single-day digestion ($93,000 → $84,000 → $91,000), swift rebound, no systemic sell-off.

The root cause is:

1. The proportion of Chinese traders and miners decreased significantly in 2021-2022.
2. New demand sources such as US spot ETFs and MicroStrategy have become the dominant force.
3. The market's pricing model for regulatory risk has shifted from "black swan" events to "known variables."

Comprehensive judgment

The most likely scenario is that Bitcoin will consolidate around $90,000, testing support but not forming a new deep bear market . Investors should pay attention to two key price levels: $88,675 (lower Bollinger Band on the weekly chart) and $87,524 (liquidation cluster). Holding above these levels would confirm support, while a break below could lead to a rapid decline towards the $84,000 area. In the medium to long term, on-chain signals, tightening supply, and the current macro liquidity environment still support Bitcoin's value proposition. Regulatory reiterations are more likely to cause short-term disturbances than a trend reversal.