The “Chinese blackmail” that brought down bitcoin $ 100 in 1 minute, explained
Bitcoin was back over a thousand dollars and a minute fell by 100. To blame the Chinese and, above all, a paradox: governments can not control bitcoin but can, through their choices, influence the trend. We tried to understand why the founder of Euklid, Antonio Simeone
The price of bitcoin is back again under a thousand dollars. A depreciation of more than 10%, $ 100 (more or less), in less than a minute. “Guilt” a central bank, the Chinese, recalling that the respect of anti-money laundering regulations imposed an immediate suspension on withdrawals bitcoin exchange the two most important of the Asian continent, and Huobi OkCoin. Or rather, they can not be traded unless bitcoin in yuan, the Chinese currency. A nice “blackmail” for those who had invested there.
And all this seems to answer a specific logic, with the Chinese authorities (especially the government) seem to be saying to the sector trader “you are free to come here and make all trades you want, but the money you earn on our markets do not bring them out. ” In fact, as explained by the founder and CEO of the startup Euklid, Antonio Simeone, who we interviewed, there are those, among European and Western investment funds to maximize profits goes to work where there is a bigger market, and China, so far, has been a land of conquest.
It takes place in traditional markets and, even more, on the trading of bitcoin. A market that Simeon calls “primitive” and by its uncontrollable nature of governments and authorities. But there is a downside: if it is true, it is true that no government or central bank can control the market for bitcoin for better or for worse may still suffer the effects of certain choices, and the “collapse” of the equivalent to a few minutes of the announcement of the Chinese exchange is one example. Sure, compared to traditional currencies there is also a strong resilience and algorithms are able to “adapt” to any change, even suddenly, with great elasticity. But from the beginning.
Investors find themselves with money “frozen”
Antonio, what’s going on in China?
“There is a communication that Chinese government authorities have put limits on withdrowals or not could be taken for a specific period of time and litecoin bitcoin. So traders went into a panic. ”
“Put the case that I have created a bitcoin fund in Italy and purchase and sell bitcoins through these exchange in China. Apparently for Chinese customers there is this limit, but since most of the funds who trade on Chinese exchanges are Europeans now fear that there are those who can not get his investment back. ”
All the fault of the Chinese real estate bubble
So, to exemplify, traders take the money invested in Europe and bring them to China, where exchange them into bitcoin to make them earn even more. But then when the fund closes might not being able to return the investment, because you end up with bitcoin “frozen” …
“Yes, and not only in Europe. Usually I say it works well, I manage “Listen, there is this fund that I created and you the customer can buy this fund, pay fees and then when it closes you recover your money.” If this fund, however, to make trading operations interfaced with Chinese markets, so the money was moved there. And now the Chinese government says, “if you want to take the money in yuan, there are no problems, but in euro or dollar or any other currency no ‘.”
Why do they do?
“China is doing battle with these brokers, who invested almost always with the lever we earn interest. For this, probably mainly due to the housing bubble and then many Chinese could use bitcoins to take money out of China, the government has put restrictions on the use of leverage, and now has made it clear to the broker who will check them … i will check customers who invest in those accounts. It will check everyone, not just the Chinese. If there were funds from Cayman that went on bitcoin go into a panic. ”
It ‘also true that probably a traditional coin would never plummeted 10%, because the supervisors would not have the permission …
“The point is this. Bitcoin is a primitive market, but it is also true that it is not that he is back to $ 10, is always above 900. True, on a normal stock exchange would never have happened, however, for example with the election of Trump Mexican dollar was It fell by 7-8%. ”
The “paradox” of bitcoins: for better or for worse, governments influence them
And so we are faced with a paradox: bitcoin can not be controlled, violated, but can be “influenced”, albeit indirectly, if more governments would start to do like the Chinese?
“The value as well as any other asset can be manipulated. Look at it this way: most bitcoin beginning traders are geeks, excited to bypass governments, never sell them because they are convinced that it can get maybe 10-20 thousand dollars. The point is that the price you can not ever predict. It may well be that all governments will begin to do as the Chinese. In theory you say “ok, I can not close the bitcoin” but obbligheresti all brokers to transact in bitcoin. You can swap them, but it is also true that if I wanted to exchange it for another currency would have problems. The Chinese are now having a problem. And, paradoxically, at the moment they arrived at limiting non-trading as the technology. ”
And there have also been cases where the performance of governments have influenced positively the value of bitcoins …
“What happened in India, when the price jumped. From one day to another, without having announced anything, the government has severely restricted the use of cash. Someone started to think “probably the bitcoin will be the currency of the future” and then the price went up. ”
According to you, there will always be war between governments and bitcoin community, or in the end you will find some “compromise”?
“I think in the medium term will not be a bitcoin currency as euro or dollar and therefore will not be changed as the so-called currency” fiat “. Will always be a small market, there will be countries that will appreciate this technology and others will counter that. ”
When no more than two weeks ago the price was back up above $ 1,000, you wrote on Facebook that “algo it had indicated.” Really artificial intelligence guiding your algorithms can predict shocks and earthquakes in finance?
“The algo are like a complex system of different intelligences. From 2008 to date of bitcoin they have occurred many times episodes of this kind. In the DNA of algo there are also written these things. And the same algorithms can understand when certain events happen, because they have such an impression of what has happened so many times remember that particular event. “