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China and bitcoin

Last update: January 23, 2017

Updates:


China and Bitcoin

Usually when there is sustained (for some time) price appreciation of BTC people speculate it was “China again”. RMB (Chinese yuan) was devaluing steadily all through 2016 and anyone banked in China was understandably looking for a way to put their monies into something that is not losing value steadily. Rumor has it one such asset is Bitcoin, and frankly the volume on Chinese exchanges kind of confirms it, even though it is a known fact they use volumizing bots since Chinese BTC spot markets often have zero fee on limit orders.

It seems to bea safe bet to hope for BTC rise when yuan devalues some more though, and Chinese exchanges do have better liquidity than many western places.

If the Chinese were suddenly not able to trade BTC it would probably spread panic like it did after the big bubble pop in 2014.

China-BTC relationship in the news

There was news on 31 Dec 2016 that wasn’t mentioning BTC specifically but it explains Chinese authorities will make it more difficult to anyone who will want to sell RMB. It kind of mentions flow of money out of the country so, one could argue BTC is safe since there is okcoin.cn which is located in China and aimed at Chinese users but the news is so vague it looks more like it will depend on interpretation of the new regulation.

See for yourself on Yahoo Finance (archive).

The State Administration of Foreign Exchange will require extra documentation for people seeking to sell yuan from Jan. 1, while keeping each person’s annual $50,000 allowance unchanged, said the people, who asked not to be identified as they’re not allowed to speak publicly. Banks will be asked to increase scrutiny of transactions, they said.

Chyna Rekt chart via TradingView. It looks pretty much like any flavor of Ethereum right?

Bloomberg says Bitcoin was resurrected because of China

According to Bloomberg BTC is real threat for the value of the yuan - or better, one of the many threats. Read it all (archive)

Deutsche Bank strategist Gautam Kalani recently called the yuan “the most expensive” currency in the world on a trade-weighted basis. While he didn’t go into specifics, his call most likely has to do with the fact that as the dollar strengthens on expectations for Federal Reserve interest-rate hikes, the yuan gets weaker and money pours out of China.

In his latest edition of “Greed & Fear,” CLSA’s Christopher Wood notes, “Daily turnover in Shanghai-based BTC China, the world’s largest bitcoin exchange by volume, has risen from around Rmb1bn in late September to a peak of Rmb27.8bn on 22 December and Rmb16.4bn on Wednesday (see Figure 11) while the Bitcoin price has risen by 70% over the past three months to Rmb6,927.”

In fact, it’s possible that the yuan’s depreciation kicks into a higher gear, causing money to flee China at an ever faster rate. That’s because at its most recent policy meeting, the US Federal Reserve appeared to be a bit more hawkish than previously expected. The Fed said it had begun to expect three rate hikes in 2017, up from its previous forecast of two. If that happens, the dollar will get even stronger, and the yuan will get weaker.

Do you trade or buy on Chinese exchanges?

If you like futures chances are you are on OKCasino. If you are from the US, chances are you use VPN and fake data because they don’t serve US customers (officially) but don’t require any real documentation (practically, until one day might will - when you request withdrawal).

If there is indeed regulation saying more ID/doxx control is necessary you would be better off not risking losing your stash due to fake identity.

It looks like at the moment (January 2017) the best way for US traders is BitMex. They are double-offshore company which is mildly dodgy but they are accessible from Tor and you don’t need to state your identity at all since they don’t work with fiat.

Sign up here and get 10% off fees

Update 13 Jan - The genealogy of FUD

If you are reading this chances are that you know. This is just for future reference.

In the meantime sit back, relax and watch money leaking out of Chyna on http://fiatleak.com.

Timeline

Thu Dec 29 2017 Bitcoin continues to rise. John Bollinger tweets there is a potential topping pattern in the making but not enough information is available to see if it indeed will top here.

Wed Jan 4 2017 Top shorter with a position of $10 million of bitcoin gets liquidated, price shoots up to 12xx on OkCoin quarterlies. This eventually pushes the market even further up. This strong push on volume invalidates the potential bbands topping pattern (and a lot of other TA).

Thu Jan 5 2017 Bitcoin starts to crash from the high of 8888.00 CNY on OkCoin spot.

Fri Jan 6 2017 It becomes clear that Yuan devaluation is likely to continue in 2017 as govt’s foreign resources are limited but it also becomes clear that Chinese who were on trading with borrowed money were forced to get out of the market as overnight rates for borrowing offshore yuan rose THIS BIGLY. Sadly, it was known since mid Dec 2016 that this would happen some time in early January but bitcoiners were too busy counting their chickens to notice.

Wed Jan 11 2017 Previous days’ rumor of the interventions of PBOC (People’s bank of China) becomes official. PBOC investigates bitcoin exchanges in mainland China for shady practices which creates a lot of uncertainty. BTC continues to crash.

Fri Jan 13 2017 Chinese bitcoin exchanges disable margin trading (“temporarily” because of the “routine” investigation). Futures markets are not affected (at least not directly), spot volumes are down drastically as exchange with zero fees cannot create fake volume and spam trades.

Fri Jan 20 2017 All Chinese exchanges ban BTC margin trading for good. Where to trade next? Kraken or BitMEX. Or OkCoin.com for non-Americans who want to trade futures - although there are rumors they might be having issues. Apparently they are refusing verifications and withdrawals which looks a bit Goxx-ish.

At the same time Chinese exchanges disabled their no-fee trading.

Sun Jan 22 2017 In addition to this, the CEO of BTCC was also speaking of concern about BTC price actions. The price appreciation was quite rapid in 2016:

Chart

Apparently some authorities are concerned about the growth. Therefore Chinese exchanges might do a kind of “stock split” - trading will be done in mBTC instead of BTC. The “unit size” would be around 1 USD then - which doesn’t look that expensive and rapid anymore.


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