Conspiracy emerges: who is behind Bitcoin's roller coaster ride

In just a few days, Bitcoin has experienced a roller coaster ride, and the abnormal fluctuations of Bitcoin have attracted great attention from regulators. Where does the money come from? Who is driving this wave of continuous surge in Bitcoin prices? Will the surge of funds behind Bitcoin become a new channel for capital outflow? A series of doubts hang over Bitcoin, a virtual commodity.

The central bank may hold talks or set up a third-party custodian

After the central bank’s Beijing and Shanghai headquarters met with the heads of three bitcoin trading platforms last Friday, there were reports that the regulatory authorities would discuss setting up a third-party bitcoin custody platform to ensure the security of bitcoin transactions. However, on January 10, an insider of Huobi responded that “the platform has not received any notification about third-party custody for the time being.”

Zhang Hua, vice president of Leiying Enterprise, said, "The digital asset trading industry is still in its emerging stage, and Bitcoin trading funds have not yet formed a standardized third-party custody system. I personally expect that in the next two to three years, there may be substantial regulatory measures introduced.

The "bullish" conspiracy behind the surge

Affected by the relevant news released by the Shanghai headquarters of the People's Bank of China, the trading price of Bitcoin fell rapidly. Data from Bitcoin China showed that the price of Bitcoin plummeted rapidly, from around 8,000 yuan to 6,200 yuan per unit. After a brief consolidation, it fell below the 5,800 mark. After the news came out, the total decline exceeded 10%, causing the full-day decline to expand to 17%: As of press time on January 11 at 10:20, the price of Bitcoin on Huobi.com remained at around 6,374 yuan.

"The reasons for the crazy rise in Bitcoin prices are still unclear, but judging from various signs, the implementation of new foreign exchange controls by the central bank and the State Administration of Foreign Exchange in 2017 and the trend of the RMB exchange rate , Bitcoin transactions have become a new channel for capital outflows. As a global electronic trading commodity, Bitcoin carries more than just the blockchain behind it, but the flow of global funds . Now that the scale of Bitcoin transactions has reached trillions of dollars, it will be difficult to ensure that more and more domestic investors will transfer funds through this virtual commodity if there are no restrictions." On January 10, a professor from Shanghai University of Finance and Economics who wished to remain anonymous pointed out in an interview.

In the professor's opinion, it is still unknown how many investors in China are currently involved in Bitcoin transactions. However, it is certain that there is a force that is constantly pushing up the price of Bitcoin in order to attract more small and scattered investors to participate.

"Compared with legal tender, Bitcoin does not have a centralized issuer. Instead, it is generated by calculations of network nodes. Anyone can participate in the creation of Bitcoin, and it can circulate throughout the world and can be bought and sold on any computer connected to the Internet. No matter where they are, anyone can mine, buy, sell or receive Bitcoin, and outsiders cannot identify user identity information during the transaction. It seems that the threshold is very low, but in fact, the connotation is very profound. You have to understand computer technology, otherwise how can you mine Bitcoin for gold? In addition, someone must recognize Bitcoin, and there must be buying and selling to make money." In this regard, Zhang Yu (pseudonym), head of a Shanghai startup technology organization, analyzed.

In Zhang Yu's opinion, the reason why Bitcoin is so popular is that its total amount has been artificially capped. It is composed of a series of complex codes generated by computers. New Bitcoins are produced through preset programs. As the total amount of Bitcoin increases, the speed of new coin production slows down until the total amount of 21 million Bitcoins is reached in 2140. The total amount of Bitcoins mined has now exceeded 12 million. Its total amount will be permanently limited to 21 million.

More importantly, Bitcoin can be used to cash out and can be exchanged for currencies in most countries. Users can use Bitcoin to purchase virtual items, such as clothes, hats, and equipment in online games. As long as someone accepts it, Bitcoin can also be used to purchase items in real life.

"In the process of Bitcoin's skyrocketing, the people who benefited the most are undoubtedly the group of people who initially participated in the design and mining of Bitcoin. From the initial price of only one dollar per Bitcoin to over $1,000 now, the price of Bitcoin has increased 1,000 times in seven years. If these bulls do not take the opportunity to push up the price, they will not be able to make a profit." A senior player involved in domestic Bitcoin trading revealed in an interview.

"As far as I know, a group of domestic technical experts and backers have a large amount of bitcoin. In particular, the founder of a domestic blockchain laboratory has hoarded tens of thousands of bitcoins. Calculated at the current price, the value of the bitcoins he holds alone is already tens of millions of dollars. The rise in bitcoin prices is undoubtedly the most beneficial to this group of people." A market insider revealed on January 9.

The above-mentioned market insiders pointed out that the domestic groups involved in Bitcoin trading are no longer just the technical talents at the beginning, but also speculators who are ahead of the curve, as well as those who use Bitcoin trading to launder money. The amount of domestic funds is definitely not small. Once more small and medium-sized investors treat Bitcoin as a stock transaction to seek profits, the risks will accumulate. This may be the reason why the central bank interviewed Bitcoin trading networks at the beginning of 2017.