Bitcoin price plunged from $3,860 to $3,460 within the past 24 hours due to the closure of China’s third largest bitcoin exchange BTCC.
But, the majority of traders in China and other major markets such as the US, Japan and South Korea are still unaware that BTCC closed its trading platform voluntarily and other leading exchanges including Huobi and OKCoin, the two largest exchanges in China, are operating normally.
Chinese bitcoin and cryptocurrency news source CnLedger confirmed with OKCoin and Huobi representatives that they have not heard any new directives from the People’s Bank of China (PBoC) and Chinese financial regulators.
“Also note that BTCC previously listed ICO-Coin, a token specifically used to raise funds in ICO projects, issued by co-founder Yang. OKCoin and Huobi said they have not received notice from regulators and are operating normally,” said CnLedger.
It is likely that a panic sell-off by traders in China, South Korea, US and Japan caused the abrupt price drop as they mistakenly understood the closure of BTCC to a nationwide ban on bitcoin exchanges. It is important for traders and investors to understand that the ultimate plan of the PBoC and Chinese regulators is to provide and offer a licensing program for exchanges, not ban trading platforms.
Still, analysts are not worried. Prominent bitcoin investor and researcher WhalePanda emphasized that the trading volume of the Chinese bitcoin exchange market is relatively low compared to other major cryptocurrency exchange markets. More importantly, the panic sell-off from traders were caused by a misunderstanding of an independent corporate decision, not by regulatory movement from the Chinese government.
“Hey guys, bitcoin trading might be banned in China, but we just realized that there is way more volume in other countries. Thanks for the dip,” WhalePanda wrote.
Highly respected and well recognized finance analyst and reporter Max Keiser also reaffirmed earlier today that the instability of the Chinese bitcoin exchange market will simply lead traders to the Japanese market, which has been efficiently regulated by the government over the past 12 months.
“China’s Bitcoin stumble clears path for Japan to grab significant market share. A state of mining equilibrium across the globe will match global energy access; reducing bitcoin volatility (at much higher prices). Today’s bitcoin drop reflects lack of geographic mining diversity. As equilibrium (game theory) asserts itself, volatility curbed,” said Keiser.
In his statement, Keiser referred to the entrance of large-scale Japanese multi-billion dollar conglomerates to the bitcoin industry. GMO Group, one of the largest Japanese technology companies, has announced its plans to manufacture their own ASIC miners and bitcoin equipment with hundreds of millions of dollars in capital in order to compete with industry leaders such as Bitmain.
The recent bitcoin price drop was a small setback which the bitcoin industry was forced to take in order to advance and evolve. More importantly, like many minor corrections in the past, today’s bitcoin price drop was fueled by false and inaccurate news, which portrayed the closure of BTCC as an imposition of a ban on a Chinese exchange.
In the upcoming months, the bitcoin industry and ecosystem will change drastically, If the Chinese government fails to provide efficient regulations, Japan and South Korea will evolve as Asia’s major bitcoin markets.
Featured image from Shutterstock.
Last modified: May 21, 2020 9:14 AM UTC