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Author Topic: Why did China bought so much into bitcoin?  (Read 687 times)
Mikcik
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January 10, 2014, 01:18:42 PM
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Hi

I just thought about the issue and cant find answer... Why did China bought so much into bitcoin? From the little info i had (and much of it i had to "think it up") China government had printed in the last 5 (10?) years about 13 Trillion dolar worth of their currency Yuan (reinmbi)... And there are also strict capital controls in china, NOT allowing their citizens to easily !opt out" of chinesse currency and buy for example dolars etc. To prevent the flee out of yuan... And since the massive printing of new chinese money, chinese people are afraid of inflation, and this should have been one (or only?) reason for chinese people getting so heavily invested into bitcoin...

Is it true... Was the driving force behind the Chinese demand for bitcoin the fear of inflation of yuan??

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Asrael999
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January 10, 2014, 02:02:48 PM
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take your pick from these potential reasons
1) Chinese currency is not freely convertible - and there are limitations on how much can be moved out of the country by individuals (I think $50,000 equivalent a year).   By buying bitcoin, transferring the bitcoin outside of China and selling for USD people were able to get around this cap.

2) Some suggest that the Chinese currency is overvalued against the USD and that the Chinese government may seek to devalue in some fashion - people fearing this want to move more of their savings out of Renminbi and into USD or alternatives like BTC.

3) A lot of people compare Bitcoin to gold, and people love to buy gold.

There are probably a lot of other reasons as well

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January 10, 2014, 02:23:00 PM
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The trading volume has been high in China because commissions are extremely low, 0% in many cases, and a relatively small number of people are doing a huge amount of day trading.

The media misunderstood or misrepresented this high volume as indicating high demand, which caused speculators to drive the price up to $1242.

When the Chinese government started attacking bitcoin, since people thought that actual demand in China was driving the prices up, they overreacted and caused a huge crash.

Websites like fiatleak.com encourage this kind of confused thinking by suggesting that every trade represents fiat flowing into bitcoin, ignoring the fact that every trade involves one person buying bitcoins, plus another person selling the same amount of bitcoins for the same amount of fiat (less commissions)!

The biggest issue with confused thinking is that it allows unimportant facts like the high transaction volume in China to drown out important facts like the huge success of the Second Market Bitcoin Investment Trust.

Tips much appreciated! 1PPJHDawPvjh6MEzsvXrMYLgpLmyAaNXUc
Mikcik
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January 10, 2014, 03:01:01 PM
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The trading volume has been high in China because commissions are extremely low, 0% in many cases, and a relatively small number of people are doing a huge amount of day trading.

The media misunderstood or misrepresented this high volume as indicating high demand, which caused speculators to drive the price up to $1242.

When the Chinese government started attacking bitcoin, since people thought that actual demand in China was driving the prices up, they overreacted and caused a huge crash.

Websites like fiatleak.com encourage this kind of confused thinking by suggesting that every trade represents fiat flowing into bitcoin, ignoring the fact that every trade involves one person buying bitcoins, plus another person selling the same amount of bitcoins for the same amount of fiat (less commissions)!

The biggest issue with confused thinking is that it allows unimportant facts like the high transaction volume in China to drown out important facts like the huge success of the Second Market Bitcoin Investment Trust.

Well i dont fully understand... i really dont belive that the volume was driven by low fees... majority of people just buy BTC amd HOLD, they are not trading (as far as i belive), so they really dont care about the exchange fees, since it is a one time transaction, and BTC should still go up in price like hell in the future, so i think majority of people (and thus majority og bitcoins...?) doesnt care about the fees.

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