On September 15, the Chinese government and local financial regulators officially requested Chinese exchanges and trading platforms to shut down by the end of September. OKCoin and Huobi, the two largest exchanges in China, were granted leeway to operate until the end of October.
Rather strangely, bitcoin price rebounded from $2,900 to $3,600 as the Chinese government and local exchanges confirmed the nationwide suspension of exchanges. Many analysts explained that traders were looking to purchase the dip, which justifies the abrupt $800 increase in bitcoin price within a 24-hour period.
Many investors, traders and analysts still remain optimistic in regard to China’s ban on exchanges because throughout 2017, the Chinese bitcoin exchange market only accounted for approximately 10 to 13 percent of global bitcoin trades.
Regulatory friendly region
More to that, in an interview with the South China Morning Post, Bitcoin Association of Hong Kong Leonhard Weese noted that China’s restrictions on bitcoin trading and usage will drive businesses to Hong Kong and nearby countries like Japan and South Korea.
Weese told South China Morning Post:
“People in China will be more careful about marketing these events, and a lot of that marketing activity will come to Hong Kong in the form of conferences and communities,”.
Since early 2015, Hong Kong has been praised for being a regulatory friendly region for bitcoin and blockchain startups. Still, unlike China, South Korea and Japan, Hong Kong’s bitcoin and cryptocurrency exchange markets have struggled to demonstrate exponential growth. For the past three years, only 1 Hong Kong-based bitcoin exchange Bitfinex was able to evolve into a major global bitcoin trading platform.
But, Weese emphasized that if China continues to crackdown on bitcoin and cryptocurrency-related businesses, it will further drive growth to Hong Kong.
It is important to acknowledge that leading bitcoin exchanges like OKCoin, Huobi and BTCC, the three largest exchanges in China, were unfairly punished for their cooperation with the government.
Over the past 12 months, the entire Chinese bitcoin industry has closely collaborated with local authorities in order to establish transparent industry standards and to improve the Chinese bitcoin exchange market.
Instead, they were ultimately shut down by the powers, despite having allocated massive amounts of capital and resources to comply with the demands of the Chinese government.
— Joseph Young (@iamjosephyoung) September 16, 2017
It is difficult to imagine that startups with limited capital and even large-scale bitcoin companies will be willing to undergo the same path Chinese bitcoin exchanges have taken just to be shut down and terminated by the authorities.
In the upcoming months, as BTCC, OKCoin, Huobi, and other bitcoin exchanges continue to expand their international services, Hong Kong, South Korea, and Japan will likely experience rapid growth in terms of bitcoin users, trading activity, and conferences.