China Bans Crypto, Provides Buying Opportunity

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China Bans Crypto, Provides Buying Opportunity

It’s Official, China Bans Bitcoin

In news leaked early today China has made it official, Bitcoin is banned within China. According to Coindesk documents and statements from exchange officials there has been a verbal instruction to cease operations by September 15th, effecting and immediate shut down. The reason, these exchanges are operating foreign exchange businesses domestically without formal licensing or regulation.

The document outlines how the exchanges are to wind down operations with detailed instructions for reporting and banking relationships. While a shock this news is not a surprise. The move has been coming for several weeks and the reason for recent selling in the crypto markets. The correction began earlier this month with a ban on ICO’s. This ban curtailed funding of start-ups using blockchain technology and required all such businesses to return funds to owners. The reason here was simple as well, the businesses were using a illegal and unregulated method of business funding.

Two of China’s largest and oldest BTC exchanges have already announced plans to shut down. BTCC and ViaBIT are winding down operations with the admonishment to traders, get out quickly. The result, a 50% correction in the cryptocurrency market. Ethereum was hit hardest as it is the basis for most ICO’s. It fell 25% in the first few days following the ICO ban and has extended that loss to near 50%. Bitcoin, the worlds leading digital currency and primary means of exchange, fell only 20% in the first days and is down only 38% from its peak in the wake of official closure in China.

How Low Can Crypto Go?

To be honest, the cryptocurrency market could go to zero but that is far from likely. The cryptocurrency market is well established, the use of blockchain technology gaining mainstream acceptance everday. Add to that the amount of time leading up to the Friday, September 15th announcement and it becomes likely that most of the wild selling is already over. What come next will be more orderly as China’s regulators seize control of operations during the wind-down. What traders need to remember is that the correction is forced selling, the market did not want it, once China is out longer term trends can resume.

Looking at the charts, and in particular Litecoin, there are signs of over extension and the possibility of a major relief rally. The coin was down more than 65% at its low and has begun to show signs a bottom may have been reached. Looking at the daily chart we can see a market that has made a sharp pull back, retreat to a significant longer term support level, is off-the-charts oversold and forming (not yet confirmed) a large and potentially strong doji like candle.

The hourly chart shows similar. The coin hit its long term support level in the hour that China announced the total ban on cryptocurrency trading. It also formed a wicked strong doji candle on super high volume confirming support at this level. The doji itself is a tombstone and indicative of the “death of the bear market”. . . you know, sell the rumor and buy the reality. The following candle is another bullish confirmation, also on high volume. Short term traders should expect to see volatility on the lower time frames, longer term traders should consider this a buying op the way I am. You can find our list of recommended Bitcoin brokers here.

Users See ‘Buying Opportunity’ in Coronavirus Market Downturn, Says Crypto.com

Kris Marszalek, co-founder and CEO of Crypto.com. Image courtesy of the firm

Paddy Baker

Users See ‘Buying Opportunity’ in Coronavirus Market Downturn, Says Crypto.com

Even as markets were shaken by the rapid spread of the novel coronavirus, exchange and payment provider Crypto.com says interest in cryptocurrencies reached an all-time high.

CEO and co-founder Kris Marszalek told CoinDesk that transaction volumes on Crypto.com more than doubled between December and February, with app downloads also hitting all-time highs. “We saw a million users on our platform last September, and we continue to grow on a monthly basis in double-digit terms,” he said.

Based in Hong Kong, Crypto.com provides app-based trading services as well as crypto payment solutions through a Visa-powered bank card. When it was known as Monaco, the company raised a total of $26.7 million in an initial coin offering (ICO) in 2020. It changed its name to Crypto.com after purchasing the domain name for a reported $10 million in 2020.

Marszalek says the recent robust growth could be a response to the radical steps central banks are taking to stabilize financial markets. In the wake of the coronavirus crisis, the Federal Reserve on Monday launched quantitative easing (QE) with scope to purchase an unlimited amount of Treasury bills and mortgage-backed securities to prop up the U.S. financial system.

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“People are very interested in crypto in this challenging time,” Marszalek said, adding that digital assets could offer investors an independent store of value and a possible hedge against the possible side-effects of QE.

Retail investors continued to use the Crypto.com platform even when the market tanked less than two weeks, he added: “People view this as a buying opportunity.”

Other platforms, too, experienced runaway volumes in recent weeks. Brian Norton, COO of MyEtherWallet, said there were now more people buying ether (ETH) on its platform than ever before. “We have never seen these numbers, not even during the big crash in winter 2020,” he added.

Binance.US CEO Catherine Coley said her firm had had “unprecedented trading volumes” with a particular interest in stablecoins and bitcoin (BTC). “Bitcoin’s recent jump while the rest of the market tumbles proves that unlike traditional companies, Bitcoin can and will survive without bailouts,” she said.

While Crypto.com would not disclose precise numbers, a spokesperson said March 2020 saw record trading volumes on the platform at levels three times higher than in December 2020.

“Crypto was built for a crisis like this,” said Marszalek. “February was a record month, and March looks to be even better.”

Read more about.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Cryptocurrency Exchanges Officially Dead In China

Chinese cryptocurrency exchanges have breathed their last breath. (Shutterstock)

Wednesday marked the last day for the ubiquitous Chinese cryptocurrency exchange. The ban, which was announced in September, finally shuttered its last exchange and made it illegal for Chinese mainlanders to exchange digital money unless they operate offshore. Which is precisely where it is all heading.

Huobi, one of the top three Bitcoin trading platforms, stopped all bitcoin trading in mainland China and have moved to Singapore, Hong Kong, and South Korea. Shanghai-based BTCC stopped trading and said it will charge users a service fee to withdraw existing funds by Friday.

Bitcoin is one of the hundreds of cryptocurrencies that have become all the rage in just the last two years. A number of professional investment firms, from Hong Kong hedge funds to wealthy family offices, have been investing in these new digital securities, often created out of thin air and used to fund new start-ups. Bitcoin is the most popular. The Chinese penchant for gambling set Beijing monetary policymakers off this summer to shut down exchanges and initial coin offerings, the main funding mechanism for tech start-ups losing to raise what same say is fake capital. Regardless, hundreds of millions of dollars have been raised in the ICO market, which was also banned, and many of those Chinese investors are either buying cryptocurrencies in offshore accounts or investing directly in start-ups by purchasing the tokens they issue in those ICOs.

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The crypto market is not afraid of China one bit.

“None of the exchanges previously based in China ceased business. They simply moved their servers abroad,” says Scott Freeman, CEO of C2CX, a digital assets exchange registered in Luxembourg but what designed for the Chinese market. “The only change is that for the moment the funds will move in and out of local currency via P2P transactions instead of via direct deposit. From a regulatory perspective this is an inferior solution because it’s much harder to prevent money laundering.”

Stopping criminal activity, including tax evasion, is always one of the reasons why countries move to diminish or shutdown exchanges.

The decentralized nature of the cryptocurrency world makes it hard to control.

When the government announced the ban, bitcoin prices fell to $3,300 after hitting nearly $5,000 for one bitcoin. Today, one bitcoin costs $6,700. If you bought one hundred bitcoin in October 2020 for $10.26 each, you would now have $672,000 worth of bitcoin.

China’s regulators said it was not giving up on blockchain technologies, which ironically is used today primarily as a ledger for recording transactions in cryptocurrencies.

On Tuesday, the CME Group, the world’s largest derivatives exchange operators, said they would launch a bitcoin futures contract this year, pending regulatory approval. If so, the U.S. would have taken the lead in the cryptocurrency investing world.

To hear from the thought leaders in the blockchain world, tune into the Forbes podcast Unchained, hosted by Forbes senior editor and reporter Laura Shin.

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