Previously, before the People’s Bank of China requested local bitcoin exchanges to implement a trading fee system, the vast majority of traders and investors believed that the Chinese market controlled over 90% of the global bitcoin exchange market.
While the Chinese market certainly did demonstrate dominance over the global bitcoin market in the past, the emergence and development of major US and Japanese bitcoin exchanges including Kraken, Bitfinex, and Bitflyer allowed the two countries to takeover and outpace China.
Naturally, the PBoC’s involvement and statements on bitcoin showed diminishing impact on the value of bitcoin and the global bitcoin market has become less dependent on China, its government and exchange market.
The weakening authority of the PBoC over the bitcoin exchange market allowed the digital currency to reecover relatively quickly amidst substantial declines in value and demonstrate a higher level of resilience towards the PBOC and regulators.
Currently, Japan, South Korea, Singapore and the Philippines are arguably the most well-regulated bitcoin markets with practical regulatory frameworks and realistic policies in place. The US is more difficult to evaluate in terms of regulatory practicality as some states such as New York have imposed inefficient licenses and frameworks such as the BitLicense that could cost bitcoin exchanges up to US$100,000. The only bitcoin U.S exchange eligible to operate in the New York market is Coinbase.
The Japanese market and the optimistic viewpoint of its government have also served as a major factor behind the recent decline of the Chinese market.
In April 2017, a revision of the Payment Services Act will officially be activated and implemented by the Japanese government, which considers bitcoin as a legal method of payment. The highly anticipated bill is expected to have a significant impact on the bitcoin industry and bitcoin exchanges like BitFlyer as it would provide clear legality and definition of bitcoin in the Japanese market.
The Japanese bitcoin exchange market, led by leading bitcoin company BitFlyer, already controls 51.5 percent of the global bitcoin exchange market with a US$123.5 million daily trading volume. The activation of the bill will help mainstream users and the general population takes a step towards bitcoin, as it will be properly recognized as a legal payment method and tender.
When the PBoC first announced its involvement in the local bitcoin exchange market and led to the decline in the value of bitcoin by halting withdrawals for bitcoin users of Huobi and OKCoin, the US market panicked. Traders on trading platforms such as Bitfinex began to panic sell, expecting a large decline in price and delayed recovery.
The price of bitcoin plunged to $950 at the time. However, the bitcoin price has already recovered back to its previous multi-month high margin and it’s currently showing a value beyond $1,100, which is close to bitcoin’s all-time high price of $1,120 in major markets.
Looking back, the entire PBoC-bitcoin exchange fiasco that has dominated the press throughout December and January have been beneficial to the global bitcoin market, as it allowed the market to become independent and eliminate its reliance on the Chinese market. The price trend of bitcoin is optimistic and daily trading volumes in markets like Japan and the US are growing at an exponential rate.
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