No offense, but everything you write seems to push the Bear stance.
Not true: you haven't read this, I push for Bull stance back in Oct 2013 before the great great China bubble: https://bitcointalk.org/index.php?topic=315380.0 (the price was below $200 by then) I don't always sing the doom song, only that I have a cold cold heart (down-to-the-ground approach, no emotion involved in speculation). I agree China factor is limited - govt is determined to make china unimportant to world. P.S. Not sure what "push for .. stance" means in English, if you mean influnce the market: of course we can't. |
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I think it is happening now.
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can't help pointing out that I predicted the event will happen, one month ago: possibility of insolvency of Chinese exchange FxBTC examed (they are 4th biggest in China) https://bitcointalk.org/index.php?topic=557067.0(No, I don't know if the rest are insolvent, but they have a chance to save themselves by forming a league, as they did in self-regulation, thanks to the fact that Chinese traders do not use wallets, instead they transfer coins to the most trusted one when they are worried, hence if they "help each other" a real bank run can be delayed - but, it is also a golden opportunity to take down a competitor, e.g. "Hey, Huobi just came to me saying they want a league to fight bank run! They must have a problem, let's make their plead public". FxBTC is known aloof, not working together with other exchanges, it is their bane as it turns out) Chinese news system alread received instruction from central on what/how to report Bitcoin, whether state media secure the opportunity to paint Bitcoin black or not depends on their judgement of the noise Bitcoin made: Big noise -> paint Bitcoin black, now you see the ponzi scheme; small noice -> no report of Bitcoin allowed, let it die without much debate. (No I don't think Bitcoin will die, but more bad news from China expected) |
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"now is the time to reverse your position, in case the market rally by 10th May."
Have I missed something? Do you now believe they will be allowed to continue operating in some form?
No I did not think the bad news stops here and exchanges survive -- so slow it is to publish editorials, in which I should've explained a few days ago -- I think the market ignores China or feel reliefed for the moment, hence there is a possibility of small rally, and those who shorted should not risk getting themselves in the predicament.. Long term outlook for China is still bad. |
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Well, let's see. They released a joint statement today saying they are still doing business and the price really didn't dip all that much on May 4th.
You are right. I am happy to learn this. I did not short it myself (because the price had not reached the line 480$ or 450$ which I marked for shorting), for anyone who did it anyway, I am inclined to think now is the time to reverse your position, in case the market rally by 10th May. |
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Speculators: A week ago I said 480 was safe to short, I personally would short at 450$ too. If you decided to short anyway, your position now is good. I do not think the bottom of this May is not there yet, wait and it will get cheaper - but this time I am not as sure as I was when I predicted the 350$ bottom (which is precious to 24-hour). Judge for yourself - but you can also feel safe that it will not grow much higher before 10th May. two questions for you:
1: Do you think this whole china situation will be finished by the 10th May deadline? Meaning that anything bad that can happen in china regarding bitcoin should happen within that deadline?
2: do you think that the long term bottom will in the end be the $340 that we have already seen? Do you think it is possible that we are going to break that?
The China situation will not be finished by 10th May deadline. The worst punishment has not yet happened. If the market rally after 10th May, it may be an opportunity to short again, but expect less profit than the guys who shorted by 16th May, because China impact is getting weaker and weaker. It is hard to say how much China's bad future influnces prices - I recently wasn't closely following how the world is developing, thus I have no facts to base my judgement. But I consider rise in Bitcoin price will get more punishment from PBOC, because PBOC intend to make Bitcoin look like a bad investment option - it is becoming a face issue. Keep in mind that PBOC has a large, large arsenal, and they didn't take out their big weapons yet. The Dec 2013 announcement showed PBOC has the backing of weapons outside of banking system. In Chinese words, this is a fight between an ant and a tree. There will be a day when our tiny tiny bitcoin doesn't shit this world's wealthest organization (PBOC) and their powerful friends. Bitcoin is not over. When I say 'punishment' I am speaking in the tone of PBOC. I cannot answer your second question as of now. |
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You're one of the most interesting poster on these forums OP. It's always a pleasure to read your insights. Thanks you.
Thank you! Can't wait to read your next article. Excellent reporting, Zhang.
The next article was written yesterday, is in editing pipeline now. It contained no prediction but overview of Chinese Bitcoin invetment behavior (teaser: it is not much different than Chinese agarwood investment, which has a market cap in China close to the Bitcoin global market-cap). Unfortunately my eye injury delayed me, that I start to worry not being able to deliver the 3rd article before 10th May. Guest writing is a lot of work to do than random post on the forum - need to check the fact and think over the points made, whether or not they are valid and based on fact etc etc, but it is worth it, it is a pleasure and rewarding experience to work with professional editors. I did talking in the Bitcoin world. My editor is pushing for the "most insightful journalist" award, which, if successful would be very helpful position for me to move from talking to acting, to establish bitcoin projects - that I longed to do. If you send flower kindly send it as the blockchain.info nominations: Hallo, editor from bitcoinblog here. I am lucky to publish Zhangs insightful articles, and I am lucky to read you like them. Currently blockchain.info accepts nominations for the blockchain award, and one category is "most insightful journalist". If you think like me Zhangs articles are the most insightful source of information about one of the most important (price-forming) issue in the temporary bitcoin seen I would be glad if you take some seconds to nominate him. Just click here https://blog.blockchain.com/2014/04/16/the-first-annual-blockchain-awards/Thank you |
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All those banks are essentially government owned banks. Either central government or local government.
It is true. (for these Chinese banks). I explained before that in the West the banks control the government and it is the other way round in China:) |
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The market has had 5 months to price this in already  Which means you ware caught by surprise a few times during the months, right? ( a really kind wink) I am not surprised even 1 time, because I predicted the saga by 9th Jan (China goverment will cripple bitcoin operation, posted on this forum) and I observed that this is not fully priced in till 11th April bottom (which I also predicted, on this sub-forum). I often find people tends to marginalize this world-most-wealthy-organization, like Chinese marginalize the Federal Reserve. PBOC has a vast ego like other top Chinese governments, However it's not my ego at work. I truly hope that: the day people don't care about China's news come earlier and that I found my knowledge of China useless. I try to be helpful: when I really think the next bottom is in I'll say that at the risk of being a bad fortune-teller. |
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Lot of the crap is priced in already, prices have been pretty resilient
Many thought the price contained all negatives but last Caixin's report draged it down 50$. The tone of the report was special - it is not a report from a financial media, but more like a report from PBOC, because of their choice of words, even in the commentary part, is inapproprate unless spoken by authorities. Which means, PBOC intends Bitcoin to be, as the report said, "collectable items for collectors", sourvenirs. PBOC would not act by itself if it really act what they say -> should expect bad news from other sectors than directly PBOC and should expect market responds to it - my humble opinion. I expect those who has not experience reading authority reports to overlooked its message, hence the market could make mistake, shorting on 500$ and 480$ before 4th May is a bet without much risk - me personally would do it even if 3rd May price is 450$. I don't see a reasonable short burst, you don't miss much by shorting. Reserve funds to bid at sub-40$ level can be useful. |
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What makes you so sure exchanges are insolvent on the BTC side?
Correction: I am sure -> I feel sure. The security breaches in year 2013 were numerous, and there is no accident this year yet; exchanges has not been honest enough on reporting heartbleed issue, should expect the same level of honesty in other security issues. On bitcoin events, some exchanges blame users for security issue and say they are good. These are negative signals on security. Also as I explaind, I think it not so important in the short term. |
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are we expecting exchanges to announce the closing of operations?
Not in the form of deny BTC withdraw. I am sure some of the exchanges are insolvent on the BTC side of their ledger, but if we look at short-term, it is not a problem for China, because too few uses use wallets, and exchanges are considered banks - effectively the exchanges assume the role too, and some given up convincing users to use wallet for safety - this there are liquidity on BTC side. (In case of a bank-run, users withdraw from one exchange and put it to another exchange, not into wallets - this happened in small scale before, and that would create a funny situation that exchanges may even work together). I am expecting negative news from government side and bank side - I've been fathoming which Chinese government. the reason why I expect so I wish to address in a full article that I haven't got whole blocks of hours to write critically due to recent eye injury. |
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The market is brooding for negative news from China, and there likely will be. In the mean time, the market may get over-confident just by chance. The earliest possible time of negative news from China is 4th May 8:00AM, which is 0:0GMT - it may be days or weeks after that time, but it won't be earlier for simply holiday reason. If the market price rise over 500$ without apparent good news before that time, it should be a mistake, and can be speculated upon. Even 450$ may be speculated upon. I am not making prediction here this time, only that I don't think there are not much to lose by this way - reverse position a while after 4th May if you feel unsafe. Each time Chinese influnce is smaller, I hope the Chinese influnce fade away quickly, to the point that we can simply ignore Chinese news, because I am looking forward to see a stream of negative news from China, and short pain is better than long one.
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Well you should tell us your prediction before the third article, but judging from your first paragraph of this article when you said you had been too optimistic, I assume you think its going to get worse.
True, but I wish to find out in which way to get worse and its impact (or lack of) on global market, need to introspect my prediction too, a few more days helps. |
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xiexie zhangweiwu!
Really, thank you for all the information you give us.
It makes a lot of sense and means the dip we saw today might just be the beginning.
If you are patient enough to followed my advice and waited till now, my understanding is that market price has consumed negative news and negative expectation. The Chinese saga is close to an end. More bad news from Chinese government are expected but market price pretty much contained it. There will be no dip in price by 15th April unless there are bad news not from China's government. I think, if you want to buy, now is about the time. The chance of a further dip rely on a Chinese major exchange's insolvency, most investors shouldn't wait for that kind of bad news. P.S. I predicted the fiasco 9th Jan 2014: it will not declare a war against bitcoin but cripple bitcoin operations in China. So there are a certain level of confidence in me. |
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sry what i mean was that huobi and btcchina continue bank transfers or at least they say that they will continue.
did the small exchanges offer funding via bank transfer before? i thought they only used third parties for funding. so if they lose their only option to fund then all funding is stopped.
I don't think so. I think BTER is the only exchange that only used third parties for funding. There are 4 effected exchanges, that is 1:4 ratio. |
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1. The exchange always charge the highest bitcoin withdraw fee (in this year lowered from 0.02 to 0.01), a behaviour adopted by MtGox when they are hit by TM bug.
2. The exhcange runs incognito like BTC-E. They don't have a phone number, physical address - this is not new, it has always been like this. When I email to ask, the answer is simple: "(We don't tell our identity.) This is a business of trust, if you don't trust us, we can't serve you. You know what I mean." (The owner's name is not a mystery, do some searches you can find it out.)
3. They didn't lower fee under heavy competition: MtGox behave the same in attempt to regain solvency.
I don't speculate their insolvency with these 3 points, but recently:
4. They ceased to allow bank transfer withdraw. Withdraw is still possible through 3rd party payment processor (tenpay). They cited that their banks forced them to close account under PBOC order: but, the other two exchanges whose bank received such order only ceased bank-account deposite, not withdraw. Some banks may over-execute the PBOC order, but FxBTC have accounts in many banks, the chance of all of them over-execute the PBOC order is small. One can speculate it being a measurement to slow down withdraw. Here is the catch: if FxBTC really intend to slow down withdraw, they should stop 3rd party withdraw first, 'cos that arose little speculation. So, I cannot conclude FxBTC intends to slow down withdraw. But it is unusal at least, and I noted it.
With 4 unusual behaviour, I should say the possibility of their insolvency can be considered now.
I know they have not many users, and they have no English version; and I don't expect to get some splash here, but at leasat some who set up Google Alert may catch this message anyway. There is already one of the 15 PBOC-banned exchange closed: BTCIG.com website went down. It is the time people take cautious.
P.S. I know the exchange has been hacked March 2013. On my scale, this doesn't count towards a factor of insolvency speculation: every exchange I believe are hacked to some extent and all willing to make up with a part of profit, if the lose is not much. What they do after the hack marks their insolvency.
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ty for your posts, really interesting.
could you please confirm if the following statements are true:
- huobi stops withdrawls/funding with third party payment processors tonight (prepaid-cards).
I am not their user. I read the same news in Chinese and do not doubt this. - after 15th of april third parties are not allowed to deal as middle man between banks and bitcoin exchanges anymore.
This was already banned in December 2013, but no one punish the violation: PBOC seems to believed sheer threat would work. Now 3rd parties are getting orders directly, individually. There is still no one assigned to punish the violation (as far as I know) but they will not ignore direct orders. Conclusion: TRUE. - you can withdraw from and fund fiat to exchanges using bank transfer. You haven't read the news? Among 15 named exchanges, BT38, BTER, FXBTC ceased to offer any way to fund fiat = only out, no in, opposite of MtGox fiasco. BTCIG is even worse, website is down. On withdraw: FxBTC's bank forced them to cease offering cash withdraw with bank transfer, their users are hurrying to withdraw from 3rd party before 15th, at which time it will offer no in, no out. Other exchanges (except the now-offline BTCIG) allows fiat withdraw with bank transfer. FxBTC is a strange case, the only one who ceased bank-transfer withdraw. Sometimes local official over-execute higher orders in attempt to endear themselves to the above, I think FxBTC is simply unlucky to work with such an official. But it can also be possible as a deliberate move to make withdraw harder - FxBTC charges the highest bitcoin withdraw fee (0.01฿), a behaviour MtGox adopted when they can't fix TM bug, hinting FxBTC also had the same bug and perhaps lost some coins. With this considered, FxBTC users should withdraw now. I wrote an editorial in detail (the site is in German but an English version is available after a small payment): http://bitcoinblog.de/2014/04/03/exklusiv-eine-chinesische-perspektive-auf-die-situation-in-china/ |
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