Cointelegraph editor Marcel Pechman, who has extensive 17 years of market experience and has worked for Deustche Bank, UBS and Pactual & Banco Safra in the past, said in his column that China had failed in its efforts to “kill BTC”. He added a few arguments on which he relied.
At the beginning of the article, Pechman summarized the steps taken by China, which, according to him, thoughtfully tried to undermine BTC‘s popularity and investor confidence in this decentralized asset (money). He pointed out that in addition to the steps leading to a ban on BTC mining in mainland China, the local government also prevented searching for cryptocurrency exchanges through Internet browsers or ordered blocking the accounts of popular Chinese cryptoinfluencers on China’s most famous social networks. China has also ordered banks to close accounts for companies that provide OTC cryptocurrency trading services. Add to that the current law from 2017, which officially prohibits the operation of crypto exchanges in this country, there is quite a lot to be able to influence BTC itself. Especially at a time when miners were concentrating in China.
However, according to Pechman, China failed to “kill” BTC anyway. Although managed to significantly reduce his price and his hashrate, all indications are that in the end it was only a strong storm that swept, but the weather is improving again.
As for the price, it is difficult to speculate whether BTC has already found its bottom after the price drop from historical highs, but also thanks to the strengthening of its price in the previous two weeks, it is clear that a slight optimism is returning to the market. Onchain data, which reflect large outflows of BTC from stock exchanges, an increase in the number of illiquid BTCs and a growing number of active addresses, also record this assumption.
Hashrate has recovered from the worst
An important indicator is the hashrate, which began to recover after mining in China and is already above the levels of 100 to 110 EH / s. This is a significant recovery from the lowest values measured after the shutdown of mining in China, which fell to levels around 60 EH / s, although it is still far from historical highs just below the level of 200 EH / s.
Pechman pointed out that many Chinese miners have already managed to move their business elsewhere, especially to Kazakhstan (but also mentioned the USA and Canada) and the process of moving them to regions outside China will continue in the coming months. The big positive of the whole thing is that with the ban on BTC mining in its country, China has actually lost its potential “partial control” over itself. Hashrate is now much more decentralized (better redistributed across the world), which is perceived positively by perhaps the entire BTC community.
The Chinese are still trading
Pechman also pointed out that although the companies that mediated cryptocurrencies within China have been expelled from it, individual players are still involved in their trading. According to Huobi Global, more than 10,000 stores, apparently from China, have been processed through peer-to-peer markets. Through such peer-to-peer markets, the Chinese can exchange the fiat for a stablecoin of the USDT type and then use it to trade on derivatives or spot exchanges abroad.
Binance, Huobi and OKEx did not lose their dominant position
The author of the article also pointed out that, despite the Chinese government’s order, the market is still dominated by exchanges with a Chinese past. These are the Binance, Okex and Huobi exchanges, whose trading volumes have not fallen significantly despite the turbulence that China has taken care of and are still dominant compared to the volumes of American platforms such as Coinbase, Kraken, Bitfinex or FTX.
“China’s ban on mining and transactions may lead to temporary negative effects on the price of BTC, but the network and price will recover in a way that is even better than we expected.” added Marcel Pechman, who seems to suggest that in the long run, the loss of Chinese influence on the crypto market may not be a negative but, on the contrary, a very positive moment in its history.