Is China About to Ban Crypto? [gulp] Maybe.

[MeanPeopleSuck]

Since China banned ICO's last week, rumors have flown about an impending crackdown. Until now, those rumors were mostly posted by skeezy nobodies on dicey boards and chat rooms, but here's the latest, from a frighteningly credible source: https://www.coindesk.com/report-cast...oin-exchanges/

I'm a 2.5 year crypto veteran who doesn't spook easy, but this thing's got me worried. If China bans crypto, I'm guessing it'll trigger the Mother of All Crashes. Today I've been like that doomsday show "Preppers," moving my high risk stuff to low risk stuff and my low risk stuff to fiat.

PS: Raiders, if this happens, my guess is NEO will get absolutely Rekt.

Some journalists seemed to think this was going to happen even before the rumors started. That worries me, too: http://www.businessinsider.com/r-chi...true&r=US&IR=T

[Optional]

Haven't we heard this before? Like a dozen times?

Best to lose a market with so much uncertainty and manipulation anyway possibly?

[MeanPeopleSuck]

Haven't we heard this before? Like a dozen times?

Best to lose a market with so much uncertainty and manipulation anyway possibly?

Hi, Opti, how's tricks?

These rumors have a lot more reason to be taken seriously than the rumors you hear every day. For one, the sources behind both the articles I posted are said to be Chinese financial insiders who two weeks ago correctly leaked the ICO ban. In addition, there's a tweet from the official Chinese news agency that exchanges will be closed: https://twitter.com/PDChina/status/906192652521148416

So these are a far cry from "69ChickSlayer" posting some conspiracy nonsense at 4chan. Like I said, I don't spook easily, but there's enough smoke here that I'm getting safe in case it signals a fire. Hopefully, I'm totally wrong and we'll be back to 4700 by Wednesday, but my spidey sense is tingling.

And just for the record, it would be very bad to lose China. About 80% of the blockchain's hash rate comes out of the country, along with a large portion of crypto's demand. Subtract that demand and add in the massive sell side supply from the outlawed exchanges selling to refund their clients' money and you don't have to be Adam Smith to guess what will happen to the price.

[MeanPeopleSuck]

Even non crypto news sources are now reporting the rumor:

WSJ: https://www.wsj.com/articles/china-t...ces-1505100862

Barron's: http://www.barrons.com/articles/chin...ges-1505110972

CNBC: https://www.cnbc.com/2017/09/11/bitc...exchanges.html

So it this does happen, how big a hit are we talking?

[MeanPeopleSuck]

Here's an excellent "what we know so far" article: https://storeofvalue.github.io/posts...e-know-so-far/

[raiders72001]

Since China banned ICO's last week, rumors have flown about an impending crackdown. Until now, those rumors were mostly posted by skeezy nobodies on dicey boards and chat rooms, but here's the latest, from a frighteningly credible source: https://www.coindesk.com/report-cast...oin-exchanges/

I'm a 2.5 year crypto veteran who doesn't spook easy, but this thing's got me worried. If China bans crypto, I'm guessing it'll trigger the Mother of All Crashes. Today I've been like that doomsday show "Preppers," moving my high risk stuff to low risk stuff and my low risk stuff to fiat.

PS: Raiders, if this happens, my guess is NEO will get absolutely Rekt.

Some journalists seemed to think this was going to happen even before the rumors started. That worries me, too: http://www.businessinsider.com/r-chi...true&r=US&IR=T

Agree that NEO is in trouble with or without the banning of cryptos. The ICO ban is good enough to ruin NEO. I'm hoping for a big increase in QTUM today with the Mainnet release tomorrow.

I'm going with fake news market manipulation of the Chinese crypto ban but I've been wrong before with cryptos.

[Optional]

Do either of you guys think buying BTC under 4k is a smart move or not enough upside and too much downside in it at that price?

[raiders72001]

Do either of you guys think buying BTC under 4k is a smart move or not enough upside and too much downside in it at that price?

No opinion. I'm sitting tight waiting for news out of China.

[MeanPeopleSuck]

I'm going with fake news market manipulation of the Chinese crypto ban but I've been wrong before with cryptos.

Heh, who hasn't? Sooner or later crypto makes fools of us all.

But here's more bad news. Today, a Chinese OTC market closed, citing increasing regulatory pressure. https://www.coindesk.com/bitcoin-otc...hina-pressure/

That's disconcerting because most of the rumors seem to indicate that OTC-only markets will be left alone, so then why are these guys going dark?

[MeanPeopleSuck]

Do either of you guys think buying BTC under 4k is a smart move or not enough upside and too much downside in it at that price?

I do. Subject to all the usual "sometimes crypto makes us all look stupid" warnings, I view the (possibly) upcoming crash as a buying opportunity, at prices below -- and possibly way below -- $4k.

But my view's in the minority: I'm guessing China IS going to take some anti crypto action, although I don't know exactly what.

Why do I think that? Because there's so much smoke here, from so many different sources, that I'm guessing there must be a fire somewhere behind the impenetrable Chinese governmental curtain.

So if China acts and it causes a crash, I've got a gigantic pile of cash ready to buy BTC (although, tbh, I've got a pretty crap track record at picking bottoms, so I'll probably dollar cost average my buys, something like that).

Under those conditions I don't know exactly what a "good" price would be, but definitely below $4k. The TA guys have been throwing the number $3200 around a lot (the 180 day MA, I think?), so it could get bloody.

[ChuckyTheGoat]

If someone can figure out how to trade Bitcoin, salud. You're smarter than me.

On my end, I'm still ok w/ Bitcoin. Fluctuations based on recent news = normal. I like that I see different ways to spend Bitcoin + make T/A. Buy or Hold, for me.

[Optional]

Keep us updated on the China situation.

And can anyone see another crypto the Chinese govt appears to be favoring. Or just leaving alone?

That might be a lead for the future.

I also have a small concern that Wall Street will want to get behind an alternative and kill btc in the process, so that comment about USA doing the same as China above sets off alarms for me too.

[MeanPeopleSuck]

And can anyone see another crypto the Chinese govt appears to be favoring. Or just leaving alone?

That might be a lead for the future.

I read an interesting theory today that China may be trying to stall BTC's price to allow final development of a coin akin to Tethers, but for the Yuan, so that one of these coins, [whatever they'd be called, I dk, China Tethers or something], would = 1 Yuan.

Under this theory, China is depressing BTC's price so that a wider swath of its citizens can invest in the currency through the new (government approved?) China Tether, and Chinese nationals would therefore end up with a higher percentage of the 21 million total BTC's than otherwise. This would have the side benefit of solidifying China's currency, since it would always have a crypto currency equivalent for currency traders to trade against.

I mean, it's weird and wild, but I've seen stranger things in crypto....

[MeanPeopleSuck]

Wednesday's Update

1. Today, a self regulatory body for crypto in China basically said crypto lacks a legal basis for existence: https://www.coindesk.com/china-inter...al-foundation/

2. Here's an analysis I really like of the situation. I'm starting to think he may be right with Tweet 6, that if the market self adjusts enough, to China's satisfaction, then maybe a formal banning won't become necessary. But the whole tweetstorm's worth a read: https://twitter.com/brucefenton/stat...83972687286272

3. From the lighter side of things, here's how fast things change in crypto. This poll on whether the China thing's fake news ended 2 days ago with 82% of crypto voters saying it's fake. https://twitter.com/bobbyclee/status/906195001243078656

The same guy conducted the same poll again this afternoon, with mostly the same voters, and it ended almost 50/50. Just a typical 48 hours in the alternate reality called crypto we all live in.......

[Optional]

I read an interesting theory today that China may be trying to stall BTC's price to allow final development of a coin akin to Tethers, but for the Yuan, so that one of these coins, [whatever they'd be called, I dk, China Tethers or something], would = 1 Yuan.

Under this theory, China is depressing BTC's price so that a wider swath of its citizens can invest in the currency through the new (government approved?) China Tether, and Chinese nationals would therefore end up with a higher percentage of the 21 million total BTC's than otherwise. This would have the side benefit of solidifying China's currency, since it would always have a crypto currency equivalent for currency traders to trade against.

I mean, it's weird and wild, but I've seen stranger things in crypto....

That sort of scenario sounds quite credible if we look at the interest level of the Chinese govt in crypto matters. We dont see Korean or US govt making pronouncements or laws to shape the market.

Chinese govt obviously has some deeper interest than most others I think.

[Otters27]

So how will this effect Ethereum. Should I still hold for the long term?

[MeanPeopleSuck]

So how will this effect Ethereum. Should I still hold for the long term?

Yes. A rule I follow religiously is never sell crypto during a crash.

[MeanPeopleSuck]

Huge, bad news today out of China: BTCC, China's largest exchange, announced it will cease all trading -- exchange AND OTC -- on September 30th. https://www.cryptocoinsnews.com/brea...rading-sep-30/

If BTCC, China's largest, most profitable exchange is being forced to close, it's hard to imagine how any Chinese exchanges will be allowed to remain open. Expect today to be bloody as hell.

Chinese exchanges provide about 35% of global BTC demand. Or, it's looking more like, Chinese exchanges used to provide about 35% of global BTC demand.

[soxwin1917]

Huge, bad news today out of China: BTCC, China's largest exchange, announced it will cease all trading -- exchange AND OTC -- on September 30th. https://www.cryptocoinsnews.com/brea...rading-sep-30/

If BTCC, China's largest, most profitable exchange is being forced to close, it's hard to imagine how any Chinese exchanges will be allowed to remain open. Expect today to be bloody as hell.

Chinese exchanges provide about 35% of global BTC demand. Or, it's looking more like, Chinese exchanges used to provide about 35% of global BTC demand.

Just to be clear - according to them, they closed down voluntarily. So the other exchanges may stay open. We shall see.

[cog1018]

Decentralized Exchanges will mitigate this hit. I have a feeling some savy chinese investors are likely to find a way to keep trading Bitcoin.

[hotcross]

Yes. A rule I follow religiously is never sell crypto during a crash.

Agree panic selling usually is not the right move.
Buying on dip/correction is also dicey...remember do not catch a falling knife, you'll cut yourself.

Falling knife is what we have currently. Within one week, a high of $4700 (it was up to all-time high of $5000 shortly before that) to current low around $3300. That is 30% drop in price IN A WEEK.

[MeanPeopleSuck]

Decentralized Exchanges will mitigate this hit. I have a feeling some savy chinese investors are likely to find a way to keep trading Bitcoin.

Agreed; a buddy I went to school with lives in Shanghai now and he uses a combination of internet privacy tools to connect to the uncensored internet in Hong Kong (same country, different laws), so trading on western exchanges is, at least for now, still possible in China.

[MeanPeopleSuck]

Just to be clear - according to them, they closed down voluntarily. So the other exchanges may stay open. We shall see.

Well, voluntary or "voluntary"? I think we'll find out today: OKCoin and Hubai, China's other two of the "big 3" exchanges, are rumored to be meeting with regulators today: https://www.cryptocoinsnews.com/char...-a-good-thing/

At the risk of sounding pessimistic, my guess is they're going to come out of that meeting and both announce they're "voluntarily" shutting down, which will basically be the death knell for all Chinese exchanges.

If that happens, expect another selloff today, but if you can manage it, I'll definitely be buying. I wouldn't be surprised if these prices will look pretty sweet a month from now.

Does anyone know the exact time of that meeting? If anybody hears anything about that timing -- even a rumor -- please post it. I'll definitely owe you a beer.

[MeanPeopleSuck]

Friday's bad news came early. ViaBTC, a top 10 Chinese exchange, is closing on Sept 30th. https://www.viabtc.com/announcement/detail?id=11

Is anybody else getting the feeling that September 30th is going to be the last day to legally purchase bitcoin in China?

[MeanPeopleSuck]

Friday Morning's Nightmare News

1. ViaBTC, another top 10 Chinese exchange, announced it's ceasing operations Sept 30: http://www.reuters.com/article/us-bi...KCN1BQ0MG?il=0

2. Bitstamp's CEO declares that more, and possibly all, Chinese exchanges are about to close: https://twitter.com/nejc_kodric/stat...85212262699008

3. Okex, a crypto derivatives trading site, is delisting all OKCoin and Huobi contracts, effective, suspiciously, on Sept 30: https://blog.okex.com/2017/09/15/not...-constituents/

OKCoin and Huobi haven't announced they're closing yet, but that's starting to feel like just a matter of time.

4. BTC's trading down around $2500 on Chinese exchanges.

It's time to call this what it is: the Worst Case Scenario. China appears to be in the process of completely walling itself off from the international crypto markets. Starting October 1st, it's entirely possible that ALL exchanges and ALL crypto trading may become illegal -- or at least impossible -- in China.

[PSD999]

Not a smart move by communist government. The red dragon has forgotten what prohibition is. These "bad news" are good in long term for bitcoin. New type of exchange and trading is coming

[MeanPeopleSuck]

RIP China. The closure document has leaked. Full article: https://www.coindesk.com/document-li...oin-exchanges/

The closure order reads:

1. Before 20 September 6pm, exchanges shall come up with a detailed risk-free clearing plan, and send this plan to the office. Exchanges shall deal with their claims and liabilities properly, and insure that investors’ funds and virtual currencies are safe.
2. Before 20 September 6pm, exchanges shall determine a bank account, which will be used for depositing user funds. All other accounts in banks and other non-bank payment service providers shall be canceled and reported to the Business Management Department of People’s Bank of China.
3. Before 15 September midnight, exchanges shall publish closing announcements, and announce a schedule to stop the trading of all virtual currencies. New user registration shall be stopped immediately after the announcement.
4. Shareholders, controllers, executives, and core financial and technical staff of exchanges shall cooperate fully with authorities during the clearing, while staying in Beijing.
5. Exchanges shall report their developments daily to local authorities before the clearing is completed.
6. Exchanges shall save all user trading and holding data, and send it to local authorities immediately in DVDs.
The document is signed: The office of the Leading Group of Beijing Internet Financial Risks Remediation, Sept. 15, 2017

[soxwin1917]

RIP China. The closure document has leaked. Full article: https://www.coindesk.com/document-li...oin-exchanges/

The closure order reads:

1. Before 20 September 6pm, exchanges shall come up with a detailed risk-free clearing plan, and send this plan to the office. Exchanges shall deal with their claims and liabilities properly, and insure that investors’ funds and virtual currencies are safe.
2. Before 20 September 6pm, exchanges shall determine a bank account, which will be used for depositing user funds. All other accounts in banks and other non-bank payment service providers shall be canceled and reported to the Business Management Department of People’s Bank of China.
3. Before 15 September midnight, exchanges shall publish closing announcements, and announce a schedule to stop the trading of all virtual currencies. New user registration shall be stopped immediately after the announcement.
4. Shareholders, controllers, executives, and core financial and technical staff of exchanges shall cooperate fully with authorities during the clearing, while staying in Beijing.
5. Exchanges shall report their developments daily to local authorities before the clearing is completed.
6. Exchanges shall save all user trading and holding data, and send it to local authorities immediately in DVDs.
The document is signed: The office of the Leading Group of Beijing Internet Financial Risks Remediation, Sept. 15, 2017

Wow. This is rough. I wish I had the gumption to buy during this particular dip....but I don't. However, I really enjoy your analysis, MPS. Please continue to keep us updated when time allows.

[raiders72001]

Friday Morning's Nightmare News

1. ViaBTC, another top 10 Chinese exchange, announced it's ceasing operations Sept 30: http://www.reuters.com/article/us-bi...KCN1BQ0MG?il=0

2. Bitstamp's CEO declares that more, and possibly all, Chinese exchanges are about to close: https://twitter.com/nejc_kodric/stat...85212262699008

3. Okex, a crypto derivatives trading site, is delisting all OKCoin and Huobi contracts, effective, suspiciously, on Sept 30: https://blog.okex.com/2017/09/15/not...-constituents/

OKCoin and Huobi haven't announced they're closing yet, but that's starting to feel like just a matter of time.

4. BTC's trading down around $2500 on Chinese exchanges.

It's time to call this what it is: the Worst Case Scenario. China appears to be in the process of completely walling itself off from the international crypto markets. Starting October 1st, it's entirely possible that ALL exchanges and ALL crypto trading may become illegal -- or at least impossible -- in China.

OKCoin and Huobi given an extra month.

[MeanPeopleSuck]

OKCoin and Huobi given an extra month.

Which could mean they've got time to negotiate. I also noticed their announcements, which were almost word for word identical, only announced a definite end to their RMB/coin pairs, so does that leave a slight ray of hope that coin/coin trading might still remain?

[MeanPeopleSuck]

It looks like the worst is over. China's done all it's going to do and the market seems to have decided that losing China deserved to cost BTC about a 25% hit, from $5k to today's $3750ish.

Things will probably remain unusually volatile for the next couple weeks as we fill in the remaining questions (will Chinese traders find a workaround? will OTC trading remain possible? will Chinese remittance laws be relaxed to allow them to use western facing crypto exchanges?), but I think the worst of the blood letting's over.

[GradyFuson]

MPS and Raiders, Whats your opinion of what will happen at the Sept. 20 deadline that I'm seeing the China has set for a date to cease all crypto trading?

[MeanPeopleSuck]

MPS and Raiders, Whats your opinion of what will happen at the Sept. 20 deadline that I'm seeing the China has set for a date to cease all crypto trading?

I think the bad news is mostly priced in. It looks like most (maybe all) crypto trading will end in China by the end of October, but now that the market has the news I don't expect any more gigantic price shocks like we had last week.

There'll still be some jolts up or down as the last few open questions get answered (will SOME coin for coin trading still be allowed? will currency remittance laws be relaxed or ignored to allow some Chinese nationals to trade on non Chinese exchanges?), but you don't have to worry about a 40% type crash like we endured last week.

Heh, at least not until the next crisis.

[mrpapageorgio]

The WSJ is claiming in an article from today (09/18) that China might even go further: https://www.wsj.com/articles/china-w...ing-1505733976

I think at this point though people are getting the hell out of China with regards to Bitcoin so we might see more dips, but I think a lot of people are already expecting not to count on China.

[MeanPeopleSuck]

The WSJ is claiming in an article from today (09/18) that China might even go further: https://www.wsj.com/articles/china-w...ing-1505733976

I think at this point though people are getting the hell out of China with regards to Bitcoin so we might see more dips, but I think a lot of people are already expecting not to count on China.

Good post; heh, just when we thought it was safe to go back in the water....

For the first time since the crisis began, I'm going to offer an optimistic opinion: I genuinely don't believe the Chinese government will move to block mining in China.

But if they do, we're all screwed. China's mining consortiums provide about 80% of BTC's global hash rate. Without it, the blockchain would literally grind to a halt.

Plus, all mining does is bring foreign currency INTO China; my impression throughout has been that China's primary concern is capital leaving their country.

In case anyone's unclear on the whole "what is mining?" thing, here's a pretty good report on China's 2nd largest BTC mine: https://www.bloomberg.com/news/video...or-china-video