Summary:

China’s Bitcoin Trading Ban is probably NOT fake news, staying with price action and getting prepared for short-term volatility is recommended. Long-term thesis remains intact as the value of Bitcoin as the unseizable storage of value is there regardless of regulation circumstances.

I got a push notification this morning from Caixin App saying “The era of crypto exchanges is over”.

“监管当局决定关闭中国境内虚拟货币的交易所，这涉及“OKcoin”、“火币网”和“比特币中国”等为代表的所有虚拟货币与法币之间的交易所”

“The Chinese authority has decided to shut down all crypto exchanges in China, this includes any exchanges that providing fiat to crypto currency exchange services, which includes “OkCoin”, “Huobi” and Bitcoin China”.

Here is the original news (Chinese Version): http://finance.caixin.com/2017-09-08/101142797.html

Minutes after the news came out, the average Bitcoin price(Average price from coinmarketcap) plummeted from $4600 to $4000. The Bitcoin price in Chinese exchanges dropped to lowest around $3570. Then the average Bitcoin price quickly rebounded to $4300 because many non-Chinese traders believe “China’s Bitcoin Trading Ban” is a fake news.

Indeed, Both OkCoin and Huobi said they haven’ t received any official notice from Chinese government yet. So is “China ban Bitcoin trading” a fake news? As a Chinese, I believe this news is probably true.

Caixin is a Reliable Source.

Most of non-Chinese traders probably don’t know what is Caixin, Samson Mow gave an example that comparing CNN with Caixin.

Caixin is not CNN or Buzzfeed, Caixin is known to have insider information and strong tie with government authority in China. There are several unprecedented events happened in China. Only Caixin reported before the official new release. Caixin is known to be a reliable outlet of sensitive news in China.

The fall of Zhou Yongkang: Who is Zhou Yongkang? Westerner believe China is control by one leader, this is not true. China has Politburo Standing Committee. He was a member of the 17th Politburo Standing Committee (PSC), China’s highest decision-making body. Zhou is the Security Chief in China. He once oversees all police forces, legal forces. He was top 5 leaders in China by ranking. No one in Politburo Standing Committee was ever under investigation in last 28 years. The fall of Zhou Yongkang sounded impossible at the time. No Chinese media reported the news. There is only one exception, Caixin released a series of of report regarding Zhou’s relative before official announcement. The fall of Ling Jihua: one of the principal political advisers of former leader Hu Jintao. Chief of the General Office of the Communist Party of China between 2007 and 2012. One of the hottest Politburo Standing Committee candidates in 18th National Congress of the Communist Party of China. Only Caixin detailed report regarding Ling’s story right after official announcement. The fall of Wu Xiaohui: Xiaohui is the Chairman of Anbang. As of February 2015, Anbang had assets worth more than CN¥800 billion (US$123 billion).The Financial Times has described Anbang as “one of China’s most politically connected companies.” On May 1st, 2017, Caixin released a long article about Anbang(English Version). Later, TWu Xiaohui, was detained in Beijing by government authorities on June 8, 2017 as an investigation of Anbang’s activities China Ban ICO: Caixin release an article(Chinese Version) which title “ICO is illegal fund raising”on September 2nd 2017. Then People’s Bank of China released the official statement(Chinese Version) confirmed Caixin’s news on September 4th 2017.China is Likely to Ban/halt Crypto Exchange Before 19th National Congress of the Communist Party of China.

19th National Congress of the Communist Party of China is approaching (October 18). National Congress of the Communist Party is a very high profile political event in China. It’s like the Chinese internal version of mid-term election. It happens every 5 years for party elites to completed power transfer.

Politburo Standing Committee (PSC), China’s highest decision-making body will get reelected. Government is known to tighten the regulation before Congress of the Communist Party. Chinese government start banning VPN for personal use. It makes sense for regulator to temporally halt crypto trading before 19th National Congress of the Communist Party.

Tencent Finance Confirmed Caixin’s news

“腾讯财经从接近监管层和地方金融局不同信源处获悉，监管层目前已决定关停注册在国内的所有比特币交易所”

“Tencent Finance has confirm from regulator and local financial bureau，regulator has decide to close all registered Bitcoin exchange”