Is Bitcoin trading similar to A-shares?

According to data from Huobi , in the past month ending June 15, the price of Bitcoin has risen by as much as 51.75% to 4,558.87 yuan, which is nearly three times the price of 1,525.53 yuan in the same period last year. In terms of transactions, the amount of Bitcoin traded on Huobi has reached 27.3 billion yuan in the half month since June this year alone.

Such market conditions are making veteran Bitcoin investor Lin Qiang (pseudonym) feel that trading is more difficult than usual. "I hope there will be a wide range of fluctuations so that there will be some investment opportunities. If it keeps rising, the cost will be too high and it will be difficult to operate."

There seems to be no unified answer to the reason for the rapid rise of Bitcoin. It may be a replica of the Changchun Clivia-style speculation frenzy, or it may just be a natural rise derived from the slowdown in Bitcoin supply under inflation expectations.

The reporter learned that in the absence of effective supervision, the hot Bitcoin market is composed of a complex group of investors - among them are senior players with a three-year return rate of more than 10 times, programmatic teams engaged in cross-platform arbitrage, and even middle-aged women who have heard the news from third- and fourth-tier cities.

In terms of trading mechanism, the advantages that A-share market places do not have, such as T+0 trading throughout the day, 4x leverage, and short selling with coin margin, also make Bitcoin carry the wealth dreams of investors from different groups and classes. But at the same time, the uncertainty behind the market, such as the lack of supervision and strong speculative attributes, seems to be forgotten by the rapidly rising market.

As a veteran Bitcoin investor, paying close attention to the market has become Lin Qiang's daily habit.

According to Lin Qiang, he has gained an absolute return of 10 times since he started investing in Bitcoin in 2014. "My strategy is very simple, which is trend investment and absolute return." Lin Qiang said that while investing in Bitcoin, he will also pay attention to investment opportunities in other fields including stocks and futures .

In fact, the reason why Lin Qiang and others can obtain excess returns, in addition to the trend opportunities of Bitcoin, is the introduction of leverage mechanism. "It depends on whether investors can borrow money from outside to speculate (Bitcoin) according to the risk they can bear." Lin Qiang said, "Suppose you lose 50% or 60% after borrowing, but you can bear the risk, then you can borrow. There is a short-selling mechanism, futures, and you can borrow coins to sell (you can raise funds or borrow coins)."

After registering an account, the reporter found that the system would send users a video email on how to do leveraged long and short trading, and Huobi.com charged a 1% handling fee on the leveraged trading amount. According to Huobi.com, its leveraged trading service is provided by an overseas legal person named "Hong Kong Bit International Co., Ltd."

"Choosing a platform is very important. The first thing to consider when choosing a platform is its reputation; the second is its depth (liquidity); the third is the overall transaction cost; and the fourth is the stability of the platform. Currently, I basically only operate on Huobi." Huobi, where Lin Qiang and others are hiding, has become the largest Bitcoin trading platform in China. As of 18:00 on June 15, its cumulative transaction volume has exceeded 1.04 trillion yuan. Just like a replica of the A-share market, if we do not consider the currency attributes and trading mechanism, the distribution of Bitcoin investment groups seems to be becoming like the A-share market.

According to the reporter, bitcoin trading has spread to some third- and fourth-tier cities, and many middle-aged people have also joined the bitcoin investment army. "Many middle-aged people who work in banks or have retired here are investing in bitcoin, and most of them are women." A person from the banking regulatory system in the northeast region said, "Everyone knows about bitcoin investment through word of mouth, and the general amount is 70,000 to 80,000 yuan. Many cadres are also doing it. For example, someone I know from the People's Bank of China in our area is also investing." In the view of this banking regulatory person, due to the lack of effective supervision of bitcoin investment, there are also large gaps and uncertainties in its trading mechanism, market risks, and investor suitability management.