The cryptocurrency market has been roiled ever since the Chinese government cracked down on cryptocurrency trading in early September, citing concern over potential investment risk. First, it banned the launching of token-based digital currencies, otherwise known as initial coin offerings (ICOs), and then shuttered the nation’s Bitcoin exchanges as of Sept. 30.
Chinese Bitcoin traders can still use the two largest Bitcoin trading platforms, Huobi and OKCoin, until the end of October. Some Chinese traders reportedly are re-deploying funds to exchanges in Hong Kong and other neighboring areas. Other exchange mechanisms are seeing heavy volume as well.
Ivan Martchev, an investment strategist with Navellier & Associates, stated recently that China wants to shut down Bitcoin because it conflicts with the government’s commitment to maintain a strong and stable yuan. “The Bitcoin ban is a way for China to enforce capital controls, given the $1 trillion that has left the country since the summer of 2014,” he said.
Does China’s crackdown matter? Most enthusiasts say no, or at least not as much as many feared, and perhaps not for too long. For one thing, South Korea is currently the trading leader, according to at least one account. However, that might not last, after the government there said it will ban ICOs.
Many analysts and market watchers expect to see Japan secure the crown as the top Bitcoin marketplace. This spring, the island nation officially recognized the cryptocurrency as legal tender. And a J-Coin might be next.
Supporters say this adaptability is a key benefit of cryptocurrency’s inherent decentralized nature. Perhaps reflecting this, the price of Bitcoin cruised back above $4,400 this week, erasing all of the losses suffered in the last month due to the government crackdowns as well as JPMorgan CEO Jamie Dimon’s assertion that Bitcoin is a speculative fraud.