In this opinion piece, Hochstein takes a fast check out the present state of the bitcoin markets, finding that simply 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 recollect that the country is not any longer the trading hub it once was.
All else equal, meaning the market may take less time to get over the newest sell-off than from the one that happened in 2013 (you know, when the People’s Bank of China suddenly declared that bitcoin wasn’t a currency and ordered payment processors to prevent accepting it).
Just a reminder of how bad the fallout from that that basically was, during the three years it took bitcoin to get over 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 the maximum amount as 90% of worldwide volume (as shown within 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 2 reasons: China’s January ban on no-fee trading on the country’s exchanges dramatically reduced volume there; and therefore the rise of trading volumes in Japan and South Korea as shown within the chart below:
“Global trading volume now appears more distributed than ever before,” our State of Blockchain report noted in June.
Remember also, this point 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 often faraway from a blanket ban.
Of course, there are many variables that influence the worth of bitcoin, so there’s no guarantee of a speedier recovery.
But because of this more diversified market, and in context, still limited action, it stands to reason that the regulatory interventions of one country (even the world’s most populous country) should have less impact on the bitcoin price over the future .