China, Shmyna: Bitcoin Trading Is Way More Distributed Now Anyway

All else equal, the market may take less time to recover from the latest sell-off than from the one that took place in December 2013.

AccessTimeIconSep 15, 2017 at 8:16 p.m. UTC
Updated Sep 14, 2021 at 1:56 p.m. UTC
AccessTimeIconSep 15, 2017 at 8:16 p.m. UTCUpdated Sep 14, 2021 at 1:56 p.m. UTC
AccessTimeIconSep 15, 2017 at 8:16 p.m. UTCUpdated Sep 14, 2021 at 1:56 p.m. UTC

Marc Hochstein is the managing editor for CoinDesk and a former editor-in-chief of American Banker.

In this opinion piece, Hochstein takes a quick look at the current state of the bitcoin markets, finding that just because there's smoke, there's not necessarily fire.


Tl;dr: this ain't Mt. Gox – and bitcoin survived that, too.

With all the panic selling following the Chinese government's renewed crackdown on bitcoin exchanges, it's important to remember that the country is no longer the trading hub it once was.

All else equal, that means the market may take less time to recover from the latest sell-off than from the one that took place in 2013 (you know, when the People's Bank of China suddenly declared that bitcoin was not a currency and ordered payment processors to stop accepting it).

Just a reminder of how bad the fallout from that that really was, during the three years it took bitcoin to recover from those bombshells, it lost nearly half its value, dropping from an all-time high of $1,150 to under $500.

But that was at a time when Chinese bitcoin trading accounted for as much as 90% of global volume (as shown in the chart below from CoinDesk's second-quarter State of Blockchain report.)

This state of affairs persisted until as recently as January of this year:

screen-shot-2017-09-14-at-11-26-27-am-2

Since then, however, China's share of bitcoin trading volume has fallen dramatically.

This is likely for two reasons: China's January ban on no-fee trading on the country’s exchanges dramatically reduced volume there; and the rise of trading volumes in Japan and South Korea as shown in the chart below:

screen-shot-2017-09-14-at-11-27-01-am

"Global trading volume now appears more distributed than ever before," our State of Blockchain report noted in June.

Remember also, this time around there hasn't been any formal guidance from government – and it appears local exchanges Huobi and OKCoin will continue letting users trade between cryptocurrencies. In short, this is far from a blanket ban.

Of course, there are many variables that influence the price of bitcoin, so there is no guarantee of a speedier recovery.

But thanks to this more diversified market, and in context, still limited action, it stands to reason that the regulatory interventions of a single country (even the world's most populous country) should have less impact on the bitcoin price over the long term.

Chinese finger trap via Shutterstock


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.