Why Bitcoin is increasingly becoming a matter of China
The devaluation of the renminbi, and the control of capital movements, are pushing the Chinese to buy the crypto currency, which earlier this year doubled in price compared to January 2016 and its price has been steadily increasing for the past few years.
Bitcoin not only still blooms and smells, but also destroyed the myth of currency for criminals and black businesses, and after such events as the referendum Brexit and the election of Trump is increasingly being used as an alternative asset or even as a safe haven.
Bitcoin returned to the cost of more than a thousand dollars.
After the peak of the beginning of the year, the crypto currency continues to grow. These days Bitcoin reached a peak which was not observed since 2013, for twelve months its growth was 125%. Cause? Experts call it China.
Beijing has already become the first place for Bitcoin deals. And this is despite the fact that in 2013, a ban on banks and financial institutions to keep and trade the Crypto currency came into effect. Private persons, on the other hand, can freely act on their own.
In China, the trading volume of virtual currency was 80% as early as 2015, according to a report by Goldman Sachs, and since then volumes have increased.
A specialized Bitcoinity.org website, for example, shows that over the past six months of the 32 leading global platforms for Bitcoin trading, the first four use the Chinese yuan: OkCoin, which has a 37.4% market share (also works with dollars), Huobi (32 %), BTC (27.9%), lakeBtc (0.94%). In September, the Chinese Haobtc opened a mining center (Bitcoin mining) between the tops of Tibet in order to take advantage of the favorable prices of electricity for computers.
The Bitcoin boom in China is closely related to the yuan exchange rate, the official coin of the People’s Republic. “Every time the yuan falls, Bitcoin grows because the Chinese understand that they can get away from controlling capital with the help of Bitcoin,” explains Ferdinand Ametrano, a professor at the University of Milan in Bicocca and a teacher at Bitcoin and Blockchain Technologies at the Polytechnic di Milano.
The yuan loses its positions: only in 2016 the currency lost 7% of its value. Meanwhile, the Politburo of the Central Committee should monitor the export of capital abroad. In November, foreign exchange reserves fell to 3.052 trillion dollars, the lowest point in the last six years.
Last Friday, the central bank of China announced that since July, banks and financial institutions will have to track all domestic transfers abroad for amounts over 50,000 yuan (about 7,200 euros) and individual money transfers for amounts over 10 thousand dollars. In addition, from January 1, there will be checks of personal reserves for the presence of foreign currency, although the individual quota of $ 50 thousand remained unchanged.
The government justifies such a use of harsh measures as actions to prevent money laundering or terrorist financing, and not to control the movement of capital. For specialists, however, this will only strengthen the Bitcoin market, facilitating the transfer of capital abroad. In addition, the growth of the crypto currency makes Bitcoin an attractive target for investment, in comparison with the yuan, which is losing its value.
So much so, that in the last seven days (data from Bitcoinity) Btcchina trade volume amounted to 14.6 million bit-coins, Okcoin Huobi had 12.3 million and 12.1 million, which makes up 98% of the world market as a whole.