China might be banning Bitcoin exchanges

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Bitcoin's growing popularity in China may have caused the government to begin to perceive it as a threat to local currency, especially as Chinese investors bought up bitcoin and bet against the yuan a year ago. The country makes up 23% of Bitcoin trades and interestingly some of the world's biggest Bitcoin Miners are from China.

"Trading volume would definitely shrink".

While Beijing's motivation for the exchange ban was not clear, according to commentators, it comes as China launches a broad clampdown on financial risk in the run-up to a key Communist Party leadership reshuffle next month.

However, cryptocurrencies are not banned in China, only trades and ICOs.

If the Chinese government ultimately decides to handle the issue privately with its local trading platforms by cooperating with bitcoin exchange as it has done since November of 2016, bitcoin price will likely be able to recover beyond the $4,500 mark towards new all-time highs, given the successful short-term scaling of the bitcoin network through SegWit.

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Huobi, OKCoin and BTCC, the three leading bitcoin exchanges in China, have all stated that they do not believe the ban will be approved and are not even sure if it is the actual plan of PBoC. "Just 15 percent of global bitcoin trade against Japan, Korea, and the US, which equal to 80 percent", said Kikvadze.

At one point in time, China's influence on the cryptocurrency was dominant, having accounted for as much as 90pc of trading activity, but this has since diversified globally.

The country's role in the bitcoin market had already started shrinking in recent months as the authorities tightened regulation. Unfortunately for Bitcoin, the Chinese government is not a fan of cryptocurrencies, which are mostly traded by Chinese citizens who are hedging against falls in the yuan.

China was once the world's largest Bitcoin marketplace, accounting for almost 90% of global trading.

"Whenever you start to hear about Hong Kong taxi drivers becoming millionaires from buying bitcoin, you start to think this is not necessarily driven by fundamentals", he said.