Topic: [2017-01-20] The worst case speculation after PBOC inspection (Read 610 times)

I wish it was really the case this time. I's love to see that current bubble is organic and sustainable, that with $1000 we reached new price floor.
But from what I see there is always something that will pop up and crash the bulls party, with first ATH it was MtGox crash, with second, earlier this year it was PBOC intervention.
I wonder what it will be now.

"Drop in liquidity".... yeah, sure thing.

All I know is we've ground steadily higher above 1,000 without a Chinese leverage party to crash the gates this time. So you can take your quotables and shove them where the sun doesn't shine.

Blah-fucking-blah.

The Chinese exchanges have been inflating volume and other hi-jinks for as long as anyone can recall. So what if they're finally being beat into compliance, it was going to happen eventually. So we'll see less bullshit price swings from highly leveraged chinese traders -- that's a good thing.

Maybe we would have held on to our 1,000 rally if these knob-gobblers hadn't been leveraged all to hell and back and liquidated.

1. Liquidity shortage
This is already happening. The transaction volume of 3 exchanges has dropped significantly as visualized by Willy Woo:

willy-woo-analysis
Without margin trade and loaning, automated traders may retreat from the market and turn to other assets. However, as mentioned by a professional trader, the API provided by these exchanges is best suited for bot-trading, which could not be found elsewhere. And the non-stop trading hours of exchanges across the world has no counterpart in other markets.
2. No more 0 transaction fee
It’s likely. Loaning was the common business practice on the 3 Bitcoin exchanges to support margin trade up to 5x. A 0.1%-0.5% transaction fee was charged when traders initiated such a transaction. It’s believed that the margin trading fee was to compensate the 0 fee of normal Bitcoin trade and also the major source of income for these exchanges. By the way, these three exchanges have 100 to 300 full-time staff.
3. Exchange shutdown
As for a total shutdown of bitcoin exchange, most people assumed it would be unlikely. There is no mention of “illegal” wording in the briefing, thus “shutting down” has no legal support. Besides it would be a deadly blow to the emerging trend of blockchain applications, in which Chinese companies have invested thousands of millions. “illegal bitcoin trading” may lead to another question: “is blockchain legal?”.

I always find it funny that they remind themselves of bitcoin every time there's a rally. It was like that in 2014 and we have it again in 2017. They didn't care how the exchanges were operating in 2016, because the price wasn't spiking, but now it's hunting season again. I think some of those legislators and inspectors are traders and investors, or somebody is paying them to work harder when he wants to manipulate the price.

If this in the long run proves that it diminishes the level of volatility, then I think this is the best thing that happened to Bitcoin in recent years. Volatility plays a major role as to why the average joe type of people are holding back. But as with all things, if doors are closing at one place, elsewhere they will open up again. It eventually may result in traders shifting to other countries where these regulations don't apply. If you look at it from that point, the problem will only move but not completely vanish.

Hmm - this sounds like a problem.

If you read between the lines, the best thing to happen would be all user funds (fiats) would be stored via third party custody. However the “third party custody” is in direct contradiction against the regulation requirement released by PBOC and other regulatory authorities in 2013, which asked financial institutions and payment processors not to provide customers with service directly or indirectly related to Bitcoin.