Observation | The market in Huaqiangbei is so prosperous, but is it deserted?

Source: Venture Capital Exchange

Author: Wu Jiaming, Securities Times

Original title: "Bullish! Bitcoin price rises above $34,000! Reporters visit Huaqiangbei mining machine market and find it is "empty"? "

The traditional Chinese lunar year of the Ox has not yet arrived, but Bitcoin is already booming.

Two or three years ago, facing the market's pursuit of Bitcoin, "stock god" Buffett made his position clear: the hot speculation of Bitcoin is speculation, not investment. He even called Bitcoin rat poison to express his disgust for Bitcoin. Now, as of 17:30 Beijing time on January 3, data from Huobi platform showed that the price of Bitcoin has exceeded US$34,000, a single-day increase of more than 8%, and a market value of more than US$600 billion. It is worth noting that the current market value has also reached above Berkshire Hathaway under Buffett.

In the past, there was a popular saying in the cryptocurrency circle: Miners can’t make as much money as those who sell mining machines. The surge in Bitcoin prices often drives the Bitcoin mining machine market. When it comes to the mining machine market, everyone will think of Huaqiangbei first. However, a Securities Times reporter visited the Huaqiangbei mining machine market and found that this store, where many "mining machine stories" were born, seemed a bit deserted.

The mining machine market is a bit "empty"

As we all know, Bitcoin is mainly mined. In fact, "Made in China" has firmly monopolized the design and production of various mining machines in the past few years, and Shenzhen Huaqiangbei has become one of the largest mining machine sales distribution centers in the country and even the world.

Taking the escalator to the 4th floor of Huaqiangbei SEG Plaza, the words "mining machine" are still very eye-catching. In 2017, Bitcoin experienced a round of skyrocketing prices, and the mining machine stores here were very popular. Many stores that originally sold assembled computers were converted into mining machine stores.

On the 4th floor of Huaqiangbei SEG Plaza, the word "mining machine" is still very eye-catching. Wu Jiaming/Photo

Today, Bitcoin hits a new high, what is the situation of mining machine stores? Reporters found that the stores selling mining machines are still there, but there are also some "empty shops". Many empty shops still have signs with words such as "mining industry, mining machine", but they are empty.

An empty mining machine shop. Photo by Wu Jiaming

"Two or three years ago, almost all the shops on this floor were full, and most of them were selling mining machines." Manager Chen, who sells computer accessories here, recalled, "At that time, many people switched to selling mining machines. Later, the price of Bitcoin plummeted in 2018, and this place began to cool down. At the worst time, a whole row of shops was empty. I know that some people have now switched to online business, and some have already moved away."

"There are still some foreigners looking for mining machines." A staff member of a mining machine store told reporters, "Now the spot goods are in short supply. Some people are waiting to mine coins during the flood season in March and April this year, so some people will come to consult, but compared with the previous grand occasion, everyone's mentality is much more stable." He also said that he sells mining machines while mining, and of course he also trades Bitcoin, so that he can make money faster.

Walking out of SEG Electronics Market, it was already late and there were fewer people on the road. The mining machine shops in Huaqiangbei also ended their business for the day, but their "business" was not interrupted: they would release goods through WeChat every day, and they also wanted to "make a fortune" by taking advantage of the rise in Bitcoin prices. However, they did not know how the price of the currency would change, and what changes would happen to the mining machine world.

What’s the reason behind the bullishness?

"The long-dormant Bitcoin and blockchain WeChat groups are hot again." Huang Hua, who once worked in blockchain media, told reporters, "Many people are asking, how much is Bitcoin now?" Unlike the mining machine stores in Huaqiangbei, the currency circle is already boiling. In the past 2020, Bitcoin rose by as much as 300%. Even during the global market shock in March last year, Bitcoin's trend remained stable.

The most frequently mentioned macroeconomic background behind this is the loose policies of major overseas central banks such as the Federal Reserve, as well as the optimism about Bitcoin by institutions including BlackRock and PayPal, which has led to a large number of other investors following suit.

In the short term, what is the reason why Bitcoin is so bullish?

Daisy, a senior analyst at Huobi Research Institute, said that the recent continuous rise in Bitcoin prices is mainly due to the following three reasons: First, the halving market, quantitative changes lead to qualitative changes, and the continuous reduction in supply makes Bitcoin more scarce, causing price increases; second, the re-exacerbation of the overseas epidemic has aggravated the expectation of global economic recession. Global easing and the weakening of the US dollar have made global inflation an unstoppable trend, so the demand for Bitcoin has further increased; third, the market has re-recognized Bitcoin, institutions continue to enter the market, and Bitcoin has become a component of institutional macro asset allocation. Global financial payment giants have also deployed cryptocurrencies and provided related services, providing strong support for Bitcoin prices. If there is a subsequent peak market, the power of institutions will be much greater than that of retail investors, so there may be large fluctuations, and investors should pay attention to risk control.

Some analysts also said that the rise in Bitcoin prices may be directly related to the holiday. Before Christmas, the price of Bitcoin was trading around $23,000, which was also a time when market transactions were relatively active. With the arrival of the Christmas and New Year holidays, when the mainstream financial markets are closed, Bitcoin has ushered in a favorable time for an upward breakthrough.

It is worth noting that more and more overseas investors regard Bitcoin as a substitute for gold, and thus transfer assets originally used to allocate gold to Bitcoin. JPMorgan Chase is the most well-known institution holding this view. The bank believes that the concept of "digital gold" in Bitcoin is absorbing investors' funds in precious metals.