Bitcoin Explodes Higher As Chinese Interbank Liquidity Freezes; Overnight Yuan Rate Hits 45%

Tyler Durden's picture

As one veteran trader noted "something is very broken." After a massive short-squeeze sent the offshore yuan soaring during the US day session, overnight yuan deposit rates have exploded 31.5 percentage points higher to 45% - just shy of the record highs - as China's interbank liquidity crisis is front-and-center. At the same time, coincidence or not, Bitcoin denominated in yuan has gone vertical, smashing through previous record highs.

Continuing the recent trend of demonstrably withdrawing liquidity, the People's Bank of China injected a paltry CNY10 billion via seven-day reverse repos and skipped both 14-day and 28-day reverse repos at its open-market operations Thursday, according to traders. The moves resulted in a net drain of CNY140 billion for the day and a whopping CNY435 billion in liquidity at OMMOs so far this week. Yes, nearly half a trillion yuan in liquidity has been withdrawn in just the past week, a time when banks are already scrambling for every spare source of cheap funding.

As a result of this forced drain which was likely orchestrated by the central bank to crush any remaining shorts, and the utter desperation for liquidity, has prompted deposit rates to explode.


And perhaps whatever liquidity there is left is being placed elsewhere.


Smashing higher in the last few hours.


For now the short squeeze efforts of the PBOC are not extending the move in CNH.

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38BWD22's picture



Hang on, bitchez!


(Take some BTC gains before too long though)


Draybin Deffercon III's picture
Draybin Deffercon III (not verified) 38BWD22 Jan 4, 2017 9:02 PM


Bitcoin has taken out gold now! What next? Tomorrow teh world!

38BWD22's picture has BTC:Gold ratio at 1.04 (gold higher)

* * * boxscore:

China: 13,000 BTC

USA: 730 BTC

ROW (total): less than 2

Elapsed time: ~15 minutes.  LOTS of trading tonight.


Yen Cross's picture

  Au looks poised to take another leg higher, a bit later.

38BWD22's picture



Since I own far more Au than BTC, that's all good too, Yen my frien!

BaBaBouy's picture

When GOLD really gets going it will smash Bitcoinz to Digital 1's and 0's ~~~

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) BaBaBouy Jan 4, 2017 9:50 PM

I doubt that. Bitcoin is teh choice of a new generation.

chubbyjjfong's picture

Bitcoin or Pepsi? Didn't work out so well for Michael Jackson, now did it.

Spigot's picture

Divide above ground gold metric tonnes by total possible bitcoins = a lot of gold to the bitcoin. Bitcoin is divisible to the 100 millionth, not so gold, eh?

Current trending would indicate sell gold or anything to get bitcoin. Wait.

Once equilibrium pricing has established a range then trade very, very little bitcoin for stuff like gold, silver, etc.

5% of your portfolio in bitcoin and hold it for 3-5 years...

Manthong's picture

The real money in BTC has already been made.

BTC probably has a great future for day-to day small transactions.

I believe there will be another substantial pullback.

How much BTC does the PBC have?

How much AU does the PBC have?

What are the values of the relative positions?

How many coin shops and gold dealers accept BTC for AU?

In what parallel dimension is BTC worth the same or more as AU?

In how many countries can you pay your taxes, bank loans, buy a car or a house in BTC?

What part of the SDR is weighted in BTC?

Not saying anything bad about BTC… I will own some in the not too far future…

It is still a young and novel currency.

Just some things to think about.


gustolehe's picture

"The real money in BTC has already been made."


Then a list showing that bitcoin is still in its infancy.

"It is still a young and novel currency."


Thanks for showing why there is such a big upside

gustolehe's picture

"The real money in BTC has already been made."


Then a list showing that bitcoin is still in its infancy.

"It is still a young and novel currency."


Thanks for showing why there is such a big upside

Manthong's picture

With a ceiling of 21MM it certainly can go up in value… eventually… with much wider acceptance.

I think 16MM have been mined so far.

But who is going to buy into an ethereal medium of exchange and store of value as the limit closes in and the relatively small community of users has jacked the price up to the moon?

Just thinking out loud.

Let’s see… one BTC with still limited acceptance or one AGE with a universal  6000 year history of desirability…

Hmm.. decisions.. decisions.. decisions.


..and I am not the consummate expert, but it just seems that the proof of work might have been a bit too easy and that the number of BTC has grown a bit fast.

..and I know it is getting harder each passing day.




IMHO BTC is a convenience device where accepted… that’s great.

BTC could also be a SHTF back-up… that is good.

Convenience in places and a bit of SHTF insurance.

That's great.

The ability to transact outside the oppressive banking system… huge.

But regarding investment, it is both a fear and a greed trade and will continue to have volatility to Biblical extents.

I think that is cool.

You know what they say… “Volatility is the spice of life”.

Oh, no… they don’t say that but I just did.




White Mountains's picture

Oh, but gold and silver are not  fear and greed trades.  Got it.

fattail's picture

Which alternative currency do more chinese citizens own BTC or AU?  Indians?  Which is easier to control?  Which transactions are easier to tax?

There is your answer.

anarcode's picture

"BTC probably has a great future for day-to day small transactions."

BTC is terrible for day to day small transactions. It's best used for the occasional medium to large transaction.

For day to day small transactions, Ethereum would be a much better choice, especially when it's converted to a POW system.

If you need privacy though then Monero or Zcash would be better choices.



tarabel's picture



So is Bernie Sanders and the Kardashians.

800409523's picture

The world doesn't go backwards. I seriously doubt the world is going to trust another any further currencies that claim to be backed by gold. We know how that always ends up. Fool me once....

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) Yen Cross Jan 4, 2017 9:10 PM

Probably better that you guys take the rear guard. You will be safer there while teh real virtual men are dealing with these banksters....

Yen Cross's picture

 Dude--- seriously, you're going to die of cardiac arrest, like one of those crazy Asian gamers. Give it a rest- please.

  I realize it's dark for a month in Kanukistan, so you've got "cabin fever". Go buy a few goats and sheep to ease your tensions.

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) Yen Cross Jan 4, 2017 9:26 PM

Maybe that's a good idea. I'll go call some coyotes in.

therover's picture

If those coyotes are of the 'ugly' kind  and look like the girls in the movie Coyote Ugly, you da man. 


UnschooledAustrianEconomist's picture

Maybe you start with the goats first. They don't bite....

Arnold's picture

Christ, an Austrian trying to make a joke.

The apocalypse is on.

White Mountains's picture

Hey, don't disparage farmers with your mouth full.  It's bad manners.  Besides, he can eat goats and sheep - you're gold won't save you during the worst of times.

StackShinyStuff's picture

Ha!  You said THE rear guard, not TEH like you usually do.  Fucking poser.

White Mountains's picture

That you noticed and took the time to post about it is proof he has mind f'cked you.

Dark Daze's picture
Dark Daze (not verified) 38BWD22 Jan 4, 2017 9:13 PM

And one is based on electricity and the other is based on digging it out of the ground. Who do you think is going to win?

OceanX's picture

Good question! It's a networked world...

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) Dark Daze Jan 4, 2017 9:19 PM

Electricity FTW!

Arnold's picture

It takes infrastructure to dig Gold.

alot of it.

Gold and Silver in your hand takes fiatski.

OceanX's picture

Any insight to these: 

Ethereum     $1,034,351,107     $11.81     87,591,551 ETH     $44,705,900     20.40%     sparkline

 Monero     $253,651,718     $18.54     13,683,241 XMR     $9,983,450     up 13.10%     today  sparkline

 Ripple     $236,332,703     $0.006504     36,337,298,649 XRP *     $1,853,520     1.21%     sparkline



Zorrohodge's picture

I have the first two. Ethereum I am long on margin expecting it to hit $15+ I think both should have market cap 1/10th bitcoin (the smart contracts crypto and the privacy crypto). Currently they are both below this.

Lot of upside in those 2. Ripple is a joke the founders hold many many many coins and basically set the price.

Arnold's picture

I have one whole Bitcoin.

I'm coming for you if it doesn't pay off DD.

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) Arnold Jan 4, 2017 9:09 PM

I won't sweat it... you will become teh new 1%.

(Our 1% isn't as much violent/psychopathic like the old ones, just really fucking annoying).

MoonSun's picture

One full Bitcoin is more like ranking in the new 0,01% of the population.

Mustafa Kemal's picture

silverer, we loved the movie kronos when we were kids. with those pumping pistons squishing the natives....

silverer's picture

They have no criminally proven system to suppress the bitcoin price like they do with silver and gold. Yet.

UnschooledAustrianEconomist's picture

I love the concept about independent crypto-currencies as an alternative to worthless fiat. But the "yet" thing is what bothers me. Really no way to fuck it up the one way or the other???

Zorrohodge's picture

It was the 8 year anniversary Yesterday and it's safe from such things so far so good.

mosfet's picture

While the IRS may take it's time going after Coinbase for taxes, the PBOC can easily take on or take out every BTC exchange in China virtually over nite.  I say 'in' China because (for anyone who lives there) existing capital controls already limit Yuan from leaving the country to buy bitcoin on foreign exchanges.  While the BTC network may be robust and distributed; Exchanges not so much. In fact the PBOC only needs to cap or outlaw Yuan to BTC transactions and wide-spread fear of being 'disappeared' or facing steep fines will do the rest.

No digital or paper currency with counter party risk is immune from governments.  I suspect Chinese (No, make that All) Bitcoin holders are about to find that out the hard way.

If I was holding Bitcoin I'd have to ask myself a few questions

A. Do I believe it could instantly sell-off by 25% if China even hinted at banning it?

B. Would I be among the first to get out?

C. How long would it take for BTC to reach no-bid?

breaktwister's picture

I think Bitcoin is becoming a huge problem now for global governments as it shows the real weaknesses of their centrally manipulated fait.  What can they do about it?  A lot of folk think nothing but anyone that was involved in online poker 10 years ago will know how the US gubmint took that industry down by making it illegal for "payment processors" to process payments to "illegal online gambling" companies.  It is not a huge stretch of the imagination to see how global governments could collude to do the same with Bitcoin, putting most current exchanges out of business, or forcing them to a jurisdiction that refuses to collude and if this happens that jurisdiction will face retribution forcing them into the global ban on bitcoin.  Interesting times for sure. 

Mass_hysteria's picture
Mass_hysteria (not verified) Draybin Deffercon III Jan 4, 2017 9:14 PM

it's not higher than gold yet but i know one thing and ur high as mount everest!

JackT's picture

Bout time for another Mt. Gox

kamikun's picture

(re: taking gains) Yes, dcb, doing that right now. Cashing out a few measley percent of my BTC, dash, and tether holdings into my local currency now. Not much - but enough to take the sting out of the eventual retracement when (if?) it comes.

38BWD22's picture is a good way to cash-out of some BTC for Au or Pt.

kamikun's picture

I'm a regular customer of BullionStar (close by - and capital friendly country) - although right now I'm really regretting my calls over the last few years to intermittently swap out my precious BTC for ounces of dirty, worthless gold (:)) .