Bitcoin Forum

The Chinese government does not like speculative bubbles. They are currently issuing warnings about the stock market. They are restricting lending. They are telling people not to sell any property to buy stocks. To the Chinese government, speculative bubbles cause chaos and disorder and may ruin people's lives. That in turn threatens the government's position. We saw how the Chinese government began to warn and freeze bank accounts in 2013 when bitcoin was bubbling.

From the point of view of Chinese exchanges, bubbles are a bad thing. If a bubble develops, the government will come back in and start shutting things down.  What if China's top three exchanges made a pact to keep bitcoin from bubbling? They would have nice, calm business for years. This is my conspiracy theory. They can short bitcoin, engaging in stop hunting with phantom coins to take money from heavily leveraged buyers. At the same time, they contain any major rallies so they don't catch heat from their government. At the same time, miners are selling coins everyday anyway, so the default pressure is down.

Only an absolutely enormous bullwhale who keeps buying and withdrawing coins could possibly expose such a plan. And I don't think we have a bullwhale like that.

You may well have a point.

From here

http://www.coindesk.com/chinas-bitcoin-exchanges-survived-the-crackdown-battle-aftermath/

'Xu, CEO of OKCoin, is a co-sponsor of the Garage Café meet-up too. During his talk, he made a plea to the audience not to use bitcoin as a speculative vehicle. Xu said:

“If the exchange rate shoots up as crazily as in November, there is a good chance that we will spend this Spring Festival behind bars.”

Hopefully the Chinese exchanges will slowly become an irrelevance as better Western options arrive. Overall I don't think they've done BTC many favours and a country where it can't be used for anything other than speculation and trading isn't going to get it where it deserves to be.

So we have persistent rumours of fake volumes, astounding unprofessionalism such as the Roger Ver contract drama and a publicly stated and very powerful incentive to not let the price spiral upwards.

That's disregarding the general climate of doing business in China which is a shower of shit in terms of transparency at the best of times.

It's a rather persuasive case.

I totally agree with what you said  ;D

If the bubble arises, I don't think it will come from China! Chinese gov has implemented a lot of measures to tackle the speculative issues, like deposit and withdrawal limit, unable direct transferring money to exchanges etc! Then the bubble is effectively contained later!

I don't know where the bubble will come from. I only know that the Chinese government will not be happy to see it.

When the next bubble comes, no only the Chinese will involve but also the ppl from western! Chinese will have no ability to control it! So is the Chinese exchanges! IMO they wouldn't have the ability to contain the rallies and wouldn't take the risk of shorting bitcoin!

TIL Chinese government care about its people.

A slow gradual climb is more healthy anyway.

Yeah it'd be nice if we took the first step on the ladder any day now, even 300 seems like so far away.
Something has to change soon, I bet there are some bull whales getting itchy trigger fingers at the moment, the current price range is doing nothing for anybody.

If the Chinese can stop another bubble from happening, I'm all for it. Bubbles always hurt the underlying economy and benefit only a lucky few. The OP sounds like he thinks that the idea of stopping a bubble is something to worry about, but I disagree. Stability is better for Bitcoin and the underlying economy.

With that said, I seriously that three Chinese exchanges can control the market to that extreme. I hope I'm wrong. Bubbles are never good because they always burst.

I agree 100 percent. In Bitcoin, we have bubbles where Altcoins have pump-and-dumps. The underlying cause is different, but the result is the same.

We will have "bubbles" until we reach the point of relative stability. There's no getting to stability without them. It's part of the necessary growth pattern.

They're hard things to avoid when everything is so tiny. Human psychology doesn't often allow the slow, steady climb. Our little monkey brains are tuned to panic in both directions. When machines are the primary buyers we might see a different approach.

if there were no bubbles at all, there would be far less investors investing in bitcoin. bubbles attract people, if there is no money to be made, then there wouldn't be as much people here.

the chinese exchanges are the biggers traders already they like have plenty control and can affect others exchanges i doubt they will have problems... they keep selling and buying bitcoins as looks like they were just making a easy thing:smiley

I think that is quite possible for the exchangers to keep the bubbles afloat. As long as there are speculative funds coming in to buy bitcoins, they can continue to sell and counter balance the amount of funds between the in and out. Not sure how long this can go on while I see government measure generally are just restrictive but doesn't mean that it is completely fool proof.

In what way exactly would they do that? They cant influence every world exchange, so if they are presenting false data, they would have to pay up every cashout difference from their own pocket..
The more viable solution would be to report accounts that are buying large amounts of bitcoins to their govenment, which could then find a way to "legaly" remove such a trader.
In any way, i don't see this theory as plausible.

I have made a suggestion some time back on how they could influence the market by holding on or selling off the fee's from trades, but that is also not enough to stop a true bubble from happening,
even tho even the daily fee's are not negligible, especialy if it is a coordinated action from more exchanges together.

cheers

Heavy shorting into rallies using their own customers' funds. A bubbling was beginning to form in May/June 2014 and it looks like it was stomped out.

OK, i understand that, but if the rally is big enough, it's just a matter of time when they would be left without funds to cover withdrawals, and what then?
Claim to be hacked like gox did ?

Say that they are reducing withdrawal limits because the price is high for security reasons. Then use all the money they have and can borrow to sell and try to pop the bubble. New money will be coming in quickly during a bubble.

Reducing withdrawal limit is an ovbious red flag and they would loose customers soon enough. And regarding the other part u said, i believe you have it other way around; in the bubble, it's not the
fiat they will be in need of, but rather bitcoins. They can borrow, correct, but that has its limits, and is (should be) highly regulated, but in the end; wouldn't they just raise the price on other exchanges?

There are situations where a big enough bubble could just bankrupt them before they could pop the bubble. They would collapse.

But these days we have low volume. It's easy to control the price if you have a big enough cartel.

they have to eventually adapt to the changes, bitcoin bubble is inevitable. so they have to find a way to cope with it.
but the fact that China's top three exchanges made a pact to keep bitcoin from bubbling, looks a bit hard in my opinion. if the bubble is going to happen they might not be able to prevent it.

well they cant avoid it is a comunnity interest that affects it soo it may come stronger then before but they will keep above the problems they have funds .... they earn a good money daily with each trade sure not to get them bilionaire from day to night but for sure they have reserves to hold pression

this could explain why they are faking some volume, in their exchange, to bring new investors and raise their income with leverage


and it's not like they control a bubble either, the max they can't do is dumping their 1800 coins per day, which hardly will stop any reall bubble which might take place in the future

Great theory, OP

But you  know what will happen? Alts will bubble instead.

Even if they could stop a bubble in its initial stage, arbitrage should take care of that price fixing quite easily.
And with a great number of people withdrawing and rushing to other exchanges to sell, sh_t will surely hit the proverbial fan immediately.

like banks, as soon as they notice a huge influx of people cashing out, they will simply not allow any sort of cashout to prevent any more damage to happen.

Slow rise in response to adoption is good for BTC.

the thing is east bitcoin makes all coins worth less as he gain interest but as it loose it well,altcoins jump i remember a coin worthing x ammount of bitcoins and after bitcoins went down to the current rate the altcoin followed the loss as well....

They would just increase the negative spin/newsflow if there are signs of a bubble. It is a good thing, mind you. People losing big money in Bitcoin by being greedy can't be good for the Bitcoin economy.

it could explain why they were aiming at banning bitcoin before, when there was that huge bubble, and then they changed their mind, when the bubble started to fall

well people does panic too fast always with some bad news ,when bitcoin dropped from 300 do 200 people started to sell several bitcoins...

Chinese stocks are up 150% on a 1YR return... They don't seem very good at preventing bubbles, if indeed they are even trying?

A stock offers zero threat to the status quo. Crypto has the potential to completely ravage government plans.

The OP is about speculative bubbles not the difference between crypto and Stocks.

I would've thought crypto is a subject of political interest to the Chinese government unlike any stock. Having said that they obviously aren't keen on any type of bubble.

If you look at what happened to their property markets, they're obviously not too great at preventing them. Looks like the Chinese love a good bubble wherever they can find it.

well we wouldnt know which are legit volumes, no one can tell.

But, if the price jumps like $200 that it might be a sign of manipulation.. if you havent heard something good events I suppose.

the thing of bubles is very easy,they will happen always and yes if bitcoin price jumps around 200 dollars from no where sure is a kind of manipulation... but im sure is very hard to manipulate bitcoin there is a big ammount to invest on it and wont last one day since some tradees will take down the orders easy

LOL. But that's true as long as people behave like caged cattles.

300 seems more pratical now, since the 200 price zone has been climbing to be mid 200ish.

And its been holding for entire month now, so it looks solid in my view.

well how many years bitcoin exchanges chinese presents? they should have some money to handle big bubbles ..