Has Cryptocurrency Run its Course?

Digital currency trading, a.k.a. cryptocurrency has slowed significantly in recent weeks. The hullabaloo that followed the August rally has been tempered and now, there is increasing concern in some circles that the bubble is slowly starting to deflate. The meteoric rise in Bitcoin, Litecoin, Ethereum and other major digital currencies gained ground as the North Korean crisis erupted. As tensions between North Korea and the United States increased, traders in Asia Pacific flocked to cryptocurrency like BTC and ETH en masse. However, tensions have abated somewhat as the media’s attention shifted elsewhere. Several major global events have helped to cool demand for digital currency, notably the actions of the Chinese government.

No to ICOs?

In September, Beijing announced strict new controls against ICOs on Chinese markets. Initial coin offerings are the digital currency equivalent of IPOs (Initial Public Offerings). China is one of a growing number of countries that is looking unfavourably at companies trying to raise capital for digital currency operations on publicly traded exchanges. This concern is warranted, in that many unscrupulous operators could be launching companies with the intent to simply defraud unwitting investors. However, the punitive measures announced by China and not hampered global demand for digital currency is like Bitcoin, Ethereum, Ripple, DASH, Litecoin and the like.

Digital currency markets remain highly volatile and buoyant, owing to the widespread popularity of blockchain technology. Recall that Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic and others run off an open source code, on a peer-to-peer platform. This technology functions effectively without third-party intervention, with zero fees, commissions and hidden costs, and transactions can be processed near instantaneously. The relatively anonymous nature of digital currency trading is highly appealing to market players.

VPNs Used by Chinese Traders

Despite the rather muted impact of China’s decision vis-à-vis ICOs, many exchanges in the country will be closing up shop before the Chinese government confiscates their assets, and imposes sentences. Instead of going through these exchanges, many Chinese cryptocurrency traders are now choosing to use social messaging applications and various other P2P options to trade cryptocurrency. For those determined to continue trading BTC, ETH, LTC etc, there are many options available.

These come in the form of discrete trading through VPNs. Virtual private networks allow Chinese traders to continue profiting off digital currency movements by changing their IP addresses through servers outside of China. For Chinese traders seeking BTC, it is possible to purchase these digital currency options at a discount compared to overseas operations. BTC also trades at a premium in countries like Zimbabwe where public confidence in the fiat currency – the Zimbabwean dollar – does not exist. Clearly, the appeal of cryptocurrency is not dead, despite misgivings by countries like China.

Trade-24 Believes Digital Currency is Here to Stay

Trade-24 currency trading guru, Lance Silverstone believes that the digital currency market can withstand the current pressures from Asian Tigers like China. ‘Since many Chinese traders do not register their ID cards, all they need to do is simply go offshore and trade at foreign-based brokers. The Chinese government’s blanket ban on ICOs in early September forced the shuttering of all of the country’s 15 exchanges. Now, BTCChina, OKCoin and Huobi have closed up shop, and BTC prices have dropped in China. Clearly the authorities in the country are looking to regulate digital currency trading and not eliminate it. For China it’s always about control, and if the government can impose strict limitations on digital currency exchanges, we may see a change in sentiment. Currently, the WeChat app has been used for exchanging digital currency, but many traders fear prosecution so they are looking elsewhere. This is not the end, it’s a new beginning.’