Rumors about regulations tend to impact Bitcoin's price in the short term, but the significance of the impacts is still being analyzed and debated.
Government agency views of cryptocurrency can also affect Bitcoin's price. For example, the Internal Revenue Service (IRS) considers Bitcoin a convertible virtual currency because you can convert it to cash. The IRS also considers Bitcoin a capital asset if it's used as an investment instrument. Additionally, if you mine a Bitcoin, you are required to report it as income based on the coin's market value on the date you receive it.
China's government and central bank announced in 2021 that all cryptocurrency transactions or facilitation were illegal. Bitcoin mining was cracked down upon following a meeting of the State Council Financial Stability and Development Committee in May, which resulted in a massive shutdown of cryptocurrency mining farms in the country. Rumors of the push to end mining in the country had caused prices to drop previously—but following the release of the committee meeting in May, Bitcoin's price dropped through August 2021 to around $29,700 as miners scrambled to relocate.