News of the Chinese crackdown on local exchanges has gone from mere Fear Uncertainty and Destruction (FUD) to a confirmed fact. This caused a large scale panic in the market as the price of all coins fell on the decision.
Those most obviously impacted by the decision are the traders in China who now have no means to be able to trade on local exchanges. That has not, however, deterred them. New evidence is now suggesting that Chinese Bitcoin traders are moving their trading to Japan at an ever increasing pace.
OKCoin and Huobi are the two largest exchanges in China and they account for over 75% of all local volume. Due to their size, they were given an extra month to implement the orders to close down. What that means is that all traders have just one month to close their accounts and move their coins somewhere else.
They did not have to search for too long as exchanges in South Korea and Japan were eagerly waiting for them to fall into their outstretched arms. This outflow from China was particularly beneficial for South Korea as they overtook the Chinese in trading volume.
https://twitter.com/TuurDemeester/status/910593881409908736
Long Term Positive?
There has been a rapid fall in Chinese trading volume since. It now stands at only 5% of the global daily traded volume. Although many in China may be upset by the fall from grace, other traders and investors see is as indeed a positive step. All rumours from China have been the cause of most of the market volatility and these will dampen the volatility that surrounds the coins.
Tim Draper, who is a well-known venture capitalist and Bitcoin investor sees the Chinese exit as a positive development. He notes that the Chinese were indeed worried about their lack of leverage over Bitcoin and are weary of any currency that allows their citizens to skirt exchange controls. The days of the Chinese authorities control over Bitcoin has now officially ended.
Further Moves East
It is further good news that these traders are now moving to countries like Japan and South Korea. Both have sensible regulations when it comes to digital currency trading and their regulators don't tend to change their mind every day of the week. An example of this was the move by the Japanese regulators to eliminate the double taxation.
Many large multinational technology companies in Japan are already benefitting from the straightforward regulations in Japan. For example, GMO which is a large conglomerate, has also started to offer trading platforms as well as ASIC mining chips. We will no doubt see many more companies and traders moving to places like Japan and South Korea in the coming years. We will also see a more controlled trading environment with way less volatility
Featured Image via Fotolia
