Despite headlines from WSJ of "the most draconian measures ever" against Bitcoin, the cryptocurrency is trading up over $1100 from its post-China-"ban" lows and has topped $4100 once again this morning as the world slowly wakes up to the nonsense that shutting down a completely decentralized system is possible, and the fact that China has long-since lost any standing as a major trading hub in the cyrpto world.
Bitcoin just topped $4100 (up over $1100 from the lows last week)...
Ether is up 50% from last week's lows - just topping $300 again...
And all cryptos are strongly bid today...
And here's one simple chart to explain why "shutting China's Bitcoin exchanges" is not really that big a deal...
As CoinDesk's Marc Hochstein details, this ain't Mt. Gox – and bitcoin survived that, too.
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:
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:
"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.
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The bottom line is simple - China, Shmyna... and as far as Jamie Dimon is concerned "storm in a teacup"
No Government can stop the rise of crypto now. Bankers begin to panic. The old ripoff financial systems are crumbling. Beautiful! #bitcoin— Kim Dotcom (@KimDotcom) September 14, 2017
As we noted earlier, China's crackdown is a double edged sword: after all bitcoin was created precisely with the contingency of a government crackdown in mind, and as such should bitcoin prove resilient to Beijing's actions it will only make it that much more valuable, sending its price even higher. Furthermore, China would be effectively shutting itself out of a growing global market and potentially, lagging in blockchain development.