China suspended Bitcoin exchange trading activities last Feb. 9, including the ability to withdraw from the exchanges. But how much damage did this cause the Bitcoin price?
Even with the suspension of BTCC, OKCoin, Huobi, and other major exchanges, the Bitcoin value did not plummet as some people through it would. In fact, the drop was smaller than the one that occured in January. The price recovered in a few days.
China’s influence on Bitcoin
One of the main factors that contribute to the price of Bitcoin is China. About 93 percent of Bitcoin trading is in China due to the devaluation of the country’s yuan currency. In fact, news of a crackdown on Bitcoin led by the government in January resulted in a sharp drop in Bitcoin prices by almost 25 percent.
With the suspension of the major exchanges in China, many speculate that the price of Bitcoin could drop to more than 25 percent or 30 percent. However, the drop was only around 10 percent from $1,074 to $957. After the drop, the price began to work its way back up past the $1,000 mark.
This situation showed that Bitcoin is decentralized from China, where the country will not have as much influence on the cryptocurrency value. It is also possible that most of the trade volume in Bitcoin exchanges were not authentic.
It is not possible to know, however, if China’s loss of dominance in Bitcoin trading is a positive sign or not. Foreign exchanges around the globe have a good chance of influencing the price of Bitcoin. Bitstamp is in the lead of being the top exchange in terms of trade volume. Bitfinex is running at a close second with its Bitcoin volume.
Suspension of China’s Bitcoin exchange
Recently, the People’s Bank of China (PBOC) released a set of new requirements for the country’s Bitcoin exchange. These requirements are to fortify the country’s anti-money laundering (AML) law.
The new requirements come after PBOC officials found that there was illegal margin funding occurring within BTCC last month. There were also margin trading and short selling violations in OKCoin and Huobi.
The suspension of trading activities and withdrawal in the major Bitcoin exchanges is only temporary. The exchanges will use this time to upgrade its website in order to comply with China’s AML laws and regulations. The suspension could last for more than a month. People, who still have yuan currency in the exchange can still withdraw them.
Trade volumes in most of China’s Bitcoin exchanges saw a massive drop due to the decrease in Bitcoin demand within the country. This is due to the long waiting time for the completion of a Bitcoin withdrawal. BTCC has a 10-day waiting period for withdrawals. There are some exchanges that offer a quicker withdrawal process, with a waiting time of 48 hours.