API tools faq
paste
Advertisement
btcdrak

The Final Countdown

btcdrak
May 5th, 2014
2,043
0
Never
Add comment
Not a member of Pastebin yet? Sign Up, it unlocks many cool features!
text 6.43 KB | None | 0 0
raw download clone embed print report
  1. 05/05/2014
  2. Previous paste: http://pastebin.com/BL6mxneP
  3.  
  4. At much request, here is my opinion of the ongoing China bitcoin saga.
  5.  
  6. The PBOC have set a deadline of May 10th for compliance of their notice, which is that no financial institutions should service directly or indirectly any bitcoin related business. So that means specifically, they may not run bank accounts for bitcoin related businesses and they may not service accounts which for example, service cash recharge codes for the purpose of funding or withdrawing money from bitcoin exchanges. In short, they are disconnecting the Chinese financial system from bitcoin completely. We know this is true because about 5 major banks have published notices to this effect and they specifically name recharge code as being unacceptable.
  7.  
  8. The result is simple, Chinese bitcoin exchanges will find it increasingly difficult to run their businesses at any scale. Moving offshore does not seem viable to me because the Chinese market will be unable to wire any significant funds due to currency controls... any Chinese that already have ways of getting money out can and probably do already work with existing USD exchanges.
  9.  
  10. A small and insignificant exchange, FXBTC announced they will be closing their doors on 10th May. While this announcement had no market moving effect, it sets the tone of what we can probably expect from the others http://www.fxbtc.com/news?id=4
  11.  
  12. “Due to the recent central bank's policy, we were unprecedented pressure, including the inability to recharge withdrawals, preventing normal operation, issues and other aspects of the decision-making difficult. [...] this time facing the central bank's long-term blockade, we can do nothing,[...] we finally decided stop operating FXBTC, in order to facilitate the user to cash, we will open the site until May 10, 2014, please the majority of users in the May 10 withdrawals as soon as possible, then we will close the site”.
  13.  
  14. There is a large bitcoin conference due to be held on 10th May in Beijing, notably sponsored by the major Chinese exchanges. However, today, according to Tim Swanson @ofnumbers, the Chines exchanges are taking the PBOC notices very seriously and will not be attending (ref: https://twitter.com/ofnumbers/status/463228429974773760).
  15.  
  16. There haven't been any negative announcements from the exchanges over the last 7 days of note, so there was little reason for a major sell-off, but in the absence of news there is little reason to buy either which is why we see slow overall decay rather than massive price movements. The Bloomberg price ticker news did provide an obvious pump opportunity for the market makers (polite term for those manipulating the price) to pump from $432 to $465 but inevitably, China overshadows and once that ran out of steam we returned to the slow decay we've been seeing.
  17.  
  18. On the manipulation side however, there has been a strong effort to maintain a floor at $424. This is definitely painting the tape. They could be trying to paint a new bottom (which could be used to fool people in either directions). Why this is the case is out of scope of this document, but the manipulation is clear as daylight to me. It makes defining support and resistance difficult when support and resistance are being contrived.
  19.  
  20. Now I can only speculate as to what happens from here. I expect the slow decay to continue until there is some news from Huobi or OKCoin. At that point there will be a sharp movement.
  21.  
  22. I cannot see how the Chinese exchanges can release anything good, but let's assume they do, I believe whatever pump ensues will epic, but short lived because there is really no hope for Chinese exchanges long term, that much is sure. If the news is bad it will put “the China issue” to bed and hopefully markets will be able to disconnect (since fiat<->coin routes will be mainly cut off in China).
  23.  
  24. What seems strange is that given banks are going to prevent CNY withdrawals after the 10th May, it seems odd the exchanges wouldn't announce closure now, because after the 10th fiat in exchanges will become locked up and unable to leave via banking routes.
  25.  
  26. At Bitfinex, active USD swaps have declined from $18MM to $15MM and BTC swaps have increased to almost 10k BTC. Less people are betting long and more short. This is quite significant in my opinion (and dangerous if market makers are planning a squeeze).
  27.  
  28. So clearly we have about 5 days where is seems highly likely the Chinese exchanges will have to announce something. I am sure they are scrambling to save their businesses somehow, but the likely outcome seems certain.
  29.  
  30. I still maintain by 350-450 range as a safe long term buy range (whales have been seen buying in the 425-450 channel already), at the time of writing we're at $430. Given the amount of expectation, we're probably going to see $380-$410 when bad news comes. 5 days is a long time in the bitcoin world though. There have been banking holidays from last Thursday until today (Monday) meaning no fresh fiat into the exchanges will enter the exchanges until today.
  31.  
  32. However, I am beginning to slowly buy bitcoins again for long term hodl (https://bitcointalk.org/index.php?topic=375643.msg4022997). I will still continue to trade on margin and now accumulate USD and buy more bitcoins simply because I believe the worst is almost over regarding China. If you are not a margin trader, I would buy bitcoin on the way down. Don't try to catch the bottom.
  33.  
  34. There is still a small possibility we crash below the recent low of $340 but I doubt we would remain at those levels for long (apart from anything I imagine bad news from China will actually bring relief for many traders i.e. certainty). So flash crashes are possible but those prices are not sustainable – and if history is anything to go by, we're probably near the bottom of this crash cycle. I would expect a few months of consolidation though to flush this China nightmare out of everyone's mind before resuming the bull trend. Remember, there is a lot to be positive about with Bitcoin and this China business is like a freak storm which will pass.
  35.  
  36. The sun is always shining above the clouds ;)
  37.  
  38. BtcDrak
  39.  
  40. Follow me at https://twitter.com/btcdrak
  41.  
  42. Bitfinex referal code: bljWW56cHR gives you 10% discount on fees (I get commission)
  43. - direct link: https://www.bitfinex.com/?refcode=bljWW56cHR
  44.  
  45. BTC tips: 1Vs9QyZhBaUfgTWErztYeKH19FgR6AYEk
  46.  
  47. email: btcdrak@gmail.com
  48.  
  49. IRC: https://www.irccloud.com/#!/ircs://irc.altcoinweb.com:6697/%23CoinMarkets (as btcdrak)
Advertisement
Add Comment
Please, Sign In to add comment
Advertisement
Public Pastes
Advertisement
We use cookies for various purposes including analytics. By continuing to use Pastebin, you agree to our use of cookies as described in the Cookies Policy.  OK, I Understand
Not a member of Pastebin yet?
Sign Up, it unlocks many cool features!