Daily Express, a British tabloid, surprised readers with the forecast of the Bitcoin market drop in China, which has already taken place. However, do cryptocurrencies have any future in China?
A popular British tabloid Daily Express, quoting anonymous sources in the Chinese government, claims that China's share on the global Bitcoin market has fallen from 90% to 1%.
The publication also states that Chinese experts are afraid of the complete loss of control over the cryptocurrency market.
It had never been over 90% but has dropped to 1%
Concerns raised by local experts seem belated and somewhat absurd since a significant drop in cryptocurrency trading activity has already happened in China. It could not be otherwise, especially considering the fact that the Chinese authorities have banned trading in 2017.
At the beginning of 2018, the Chinese government tightened requirements and prohibited local banks from cryptocurrency operations and any forms of interaction with cryptocurrency exchanges.
Given the above-said, the drop of the Bitcoin market looks natural, and other outcome expectations seem illogical. Most traders operating on the territory of China has moved to the Hong Kong market after restrictions imposed by the People's Bank of China.
Migration of millions of investors gave a powerful push to the cryptocurrency market of Hong Kong (which used to be very small) and caused a rapid assets growth on local trading platforms.
Statements of the local so-called “experts” about the 90% share of China on the Bitcoin market also cause confusion. The market reached its maximum values at the very beginning of 2017.
Nevertheless, by the end of the first, month the volume of the market collapsed by 80% because of the intervention of the People's Bank of China and additional commission fees imposed by cryptocurrency exchanges. By all accounts, China’s trading volumes accounted for no more than 10%-20% of the global Bitcoin market even at their peak.
What does the Chinese government think about cryptocurrencies?
The Chinese government publicly funds blockchain projects that were created and now are promoted inside the country. The state policy for the field of cryptocurrencies in particular, and in general for blockchain technologies is similar to the attitude of local authorities towards Western social networks and search systems.
China restricts Google, Facebook, and YouTube, but gives the green light to their local alternatives: Baidu, WeChat, and Youku. By the same logic, the Chinese government supports its platforms, such as VeChain, Qtum and other blockchain projects created in China.
Many analysts believe that government restrictions on cryptocurrency trade are caused by the desire of the authorities to control the movement of finance and prevent yuan from leaving the country. It is unlikely that bans on the cryptocurrency trading will be removed in the near future. Even though restrictive measures are mostly designed to strengthen the control over the capital movements, but not against cryptocurrencies.