Is altmania coming back to China?
After 2 1/2 years of silence, China's 币圈 (bìquān) is getting a new lease on life
View from China with an Austrian School of Economics Perspective
After 2 1/2 years of downtime, it's now once again alt season in the crypto world. How much of this alt mania is still China-centric? Hard to say, but judging by the patterns we see, at a minimum some of it.
A bit of history
From 2013 to 2017, China was arguably in many senses the center of the worldwide crypto industry. 2013 was the year when crypto awareness finally reached a wide audience, obtaining lavish media coverage across the Western press amid a mixture of official condemnation and praise. But whereas in the West this led to a number of early adopters being thrown in prison, in China was the industry allowed develop more or less without any regulatory interference. Within the space of only a few years, China’s single exchange BTC China was joined by scores of others, processing billions of dollars of transactions every day. Moreover, all of this was created “on the fly” as it were, without the aid of any banks or other pre-existing financial institutions. All in all it was an amazing story.
Without going into all the details, this free for all came to an abrupt end in September 2017, when the Chinese central bank announced it was banning crypto trading in domestic currency. While the major Chinese exchanges did not vanish, they were forced to reinvent themselves as international (as opposed to domestic) entities. This was a tough transition to make, especially given the fact that they were not given much time to do it.
Yet survive they did, albeit in somewhat reduced format, with three major Chinese players surviving to this day: Huobi (HTX), OK Coin (OKX) and Binance (币安).
These days ironically crypto is allegedly completely legal in Hong Kong, where it was once heavily suppressed, while on the mainland it remains more suppressed than ever, with trading in and out of RMB often linked to black market criminal money.
While it’s difficult for authorities to stop trading, they can make it difficult to get in and out. Rumor has it that this month “crypto tours” to Hong Kong to get funds in and out of cash are a big thing.
New life
This week the market makers out there are hard at work infusing various dormant markets with new life. The coins being pumped will always vary, but the methodologies seem fairly standard, and Chinese platforms remain at the heart of many of those games.
Today's case in point: long silent BSV, which on paper almost doubled in price, going from around $50 to $95.
The catch: In order to actually be able to sell at the new price, you need to have a balance on one of the exchanges trading it, like for example Huobi. Only takes a few minutes, right? Nope - today 160 confirmations are needed, or about 26 hours - plenty of time for the market maker to do his song and dance without too much selling pressure. Huobi has played this same game countless times in the past, both with BSV and with other coins. Apparently it never gets old.
Those who kept this game in mind for the past 2 1/2 years likely did well.
Another BTC altcoin with a similar profile worth keeping an eye on: eCash, ticker XEC. Back in the spring of 2021 eCash (previously BCH-ABC) made it to over $200. It's now trading around $40, up from around $32. It's also on Huobi and requires only 1 confirmation... for the moment. The fact that only one confirmation is required is a big hint that no game is planned for the immediate future, but these things can and do change on a dime. In the crypto world, patience pays!
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