The bullish Bitcoin narrative surrounding China disappeared after the PBOC neutered the leading exchanges. The most drastic action was the suspension of Bitcoin withdrawals while exchanges’ compliance departments were upgraded. After many months of speculating when the PBOC would give the nod, it appears that Bitcoin trading is normalising.
China being China, the PBOC never overtly told exchanges to halt withdrawals. They exerted pressure where it was needed and obtained the desired result. The big 3 exchanges successfully fluffed their way back in business.
OKCoin and BTCC now allow clients to withdraw token amounts of Bitcoin each day. At OKCoin it is 10 Bitcoin per day. Clients must pass stringent KYC / AML checks, and pinky swear they aren’t using Bitcoin to evade capital controls.
XBT/CNY began 2017 at a modest premium to XBT/USD, and after successive PBOC punitive actions it traded at a discount. The discount reached a low of 20% earlier this month.
A recent Caixin article, which claimed the PBOC would issue exchange fines and clarity as to how Bitcoin would be regulated, injected hope back into the market. The XBTCNY/XBTUSD spread rallied aggressively back to par and after the recent withdrawal resumption news, the spread inched to a small premium.
Even though many traders wrote China off it still has the most number of people with the desire and means to buy Bitcoin. The PBOC recognised that it couldn’t ban Bitcoin and thus attempted to stymie its growth through various actions.
Bitcoin in 2017 is more widely held than in 2013. Punters in Japan and Korea took the “must have Bitcoin at any price” baton from China. Even Americans, evidenced by impressive new Coinbase account signups, are chomping at the “bit” to enter the digital industry. This new demand allowed themarket to ignore the PBOC attempts to control the price.
The normalisation of Bitcoin trading in China will serve as another source of dry powder to fuel the rally onwards and upwards. $3,000 Bitcoin is definitely attainable by month’s end with the renewed Chinese buying power. Expect Bitcoin to push through $2,800 by early next week as traders feel more bullishnow that China has their backs.