Despite recent reports that suggest China’s central bank is casting a critical eye on domestic bitcoin exchanges, local traders remain largely unfazed.
In conversations with CoinDesk, members of the country’s bitcoin trading community, as well as cryptocurrency exchange operators who were not involved in the talks, expressed their belief that the increased oversight of the industry will be a boon for the technology in the long term.
Over-the-counter trader Zhao Dong, who says he trades 250 BTC (or about $150,000) in the digital currency daily, said in interview that he had “no worries” about the future of the tech.
Overall, he believes that, rather than hostile, the People’s Bank of China merely wants to limit investor risk, and that it has no intention of harming or otherwise limiting use of the technology.
Zhao told CoinDesk:
“It’s true that there is some panic selling , but old bitcoiners like me aren’t panicking at all. Actually it’s a good opportunity to make a profit.”
Zhou Shouji, the operator of FinTech Blockchain Group, a bitcoin hedge fund that claims to have amassed $20m in investments, stressed that, despite the “high volatility” in the market, local traders “are not worried” about any potential government actions.
“Everyone gets the message,” he added.
The statements come as the impact of the decision by the PBoC to make public its meetings with bitcoin exchanges BTCC, Huobi and OKCoin has left the bitcoin market in flux. (Yesterday, it hit its lowest point in one month).
At press time, the price of bitcoin was $770, a value that was roughly 40% below peak prices observed earlier this year.
Yet, while confidence may still be high, some trading firms are reporting changes in customer behavior since the decline began.
Kong Gao, an employee at OTC trading firm Richfund, for example, noted that his firm had seen rapid new customer growth in the run up to the $1,153 price peak. Since then, though, he said this steady growth has declined.
The statements are notable given that OTC trading primarily appeals to larger investors, those who would otherwise influence the bitcoin price on exchanges with large purchases that can cause slippage.
“A rally like this one does have some impact on OTC volume,” Kong said. “Some of them have been anxious, but we have assured them this kind of volatility is not really uncommon in Bitcoinland.”
Kong declined to provide figures to support how much trading had been affected.
CHBTC, an exchange that sees roughly $115,000 in BTC/CNY trading daily, reported that it is still seeing new customers, even if activity is a little depressed.
“Most traders are holding back to see what happens next,” a spokesperson for the exchange said.
She added that CHBTC “welcomes” the regulation, echoing statements made by BTCC and OKCoin in the wake of last week’s news.
But even after the initial news has subsided, there remains a worry that the government’s move could be followed by future enforcement actions.
Zhao Dong noted that there is a perception that Chinese exchanges display “fake volumes”, a criticism that has long been prevalent in the West, and that has contributed to a notable distrust of these firms.
Zhao, however, stressed that “not all volumes” are fake, and that there are “many speculators and arbitrageurs” in China that are responsible for contributing to the country’s volume. (Figures from CoinDesk Research project 95% of bitcoin trading volumes occur on China-based exchanges).
Harry Yeh, managing partner at US OTC firm Binary Financial, agreed that China’s market is “huge”, or at least larger than many people in the West think.
“I think people underestimate how big bitcoin is in China. Some of the biggest traders, the biggest miners are all based out of China,” he said.
However, he acknowledged that findings of fraudulent activity would be “bad” for the market.
Others stressed the common refrain among bitcoin’s ardent supports that, even if China did move to stop or stem trading, the technology would still proliferate due to the power of the blockchain and its peer-to-peer design.
A representative of China-based exchange Yunbi, for instance, noted that he is “not worried” about the impact, despite the fact his exchange was not in conversation with the PBoC.
“From the standpoint of bitcoin development, this is a very good thing.”
China money image via Shutterstock