The rapid rise of the highly speculative cryptocurrency market has inspired comparisons to the Dutch “Tulip Mania” a period in the early sixteen hundreds where the introduction of tulips to the Netherlands from the Ottoman Empire sparked a veritable craze as the brightly coloured flower became a sought-after luxury item. Causing prices for a single tulip bulb to climb so high that they exceeded the average annual salary, with the rarest kind going for hectares of land.
Needless to say, that market came crashing down in spectacular fashion, leaving wholesale bankruptcy in its wake. When the news of China’s banning of cryptocurrency ICO’s came out on September 4th, it sparked a panic, and the subsequent mass sell-off had many a speculator proclaiming the ‘bubble’ to have popped.
Crypto price movements went from testing resistance ceilings in search of new all-time highs to dramatic dips across the board. Bitcoin shed 20% of value almost overnight! Markets recovered from the initial shock and seemed to be beginning to pluck up the nerve to begin a fresh climb.
Then rumours began to circulate that the Chinese government, nervous about Bitcoin’s disruption of the established socialist monetary order and planned to ban crypto exchanges. Panic found a second wind and prices resumed their downward trend, and the bears and naysayers began to sing crypto’s Requiem. ”
There is nothing new in speculation What has happened in the past will happen again, and again, and again. This is because human nature does not change, and it is human emotion, solidly built into human nature, that always gets in the way of human intelligence.” As a legendary trader, Jesse Livermore once said.
Predictably enough, as soon as regulatory clarity was established with Chinese exchanges, Houbi, OKCoin, Yunbi, BTCC, and ViaBTC all announcing that they would be closing their doors at the end of the month, a sense of stability was restored and Bitcoin’s price along with other coins halted their freefall.
Traders were so bullish about what the future holds for crypto that Bitcoin’s price leapt back to just beyond the $4,000 mark before sinking to just below it. Crypto seems to still be nursing a hangover from the excitement of the last 2 weeks with prices rising timidly.
It doesn’t end there though, unverified reports are once again beginning to trickle out of China, claiming that not only will the Chinese government ban on the counter trading but are moving to outlaw peer to peer trading as well as block access to foreign exchanges like Bitfinex and Coinbase.
This news comes after, it was revealed that Chinese traders had moved over to Japanese exchange, Bitflyer making the BTC/JPY trading pair the second largest. There is fear that the comprehensive ban may extend to mining as well. Which, if you ask me, is taking it a tad too far.
China accounts for less than 15% of overall trading volume, but Chinese mining is Bitcoin’s backbone, contributing about 65% of Bitcoin’s total hash rate. It appears this may not simply be about reining in Bitcoin’s speculative excesses, but shutting down the crypto economy (In China), as it circumvents Chinese traditionally heavy regulations.