Bitcoin prices fluctuate dramatically. What do exchanges think?

Bitcoin, which has attracted much attention recently, has seen its price rise for seven consecutive weeks. From early October to early November, the increase has reached 100%.

From the evening of November 4th to the early morning of November 5th, Beijing time, the price of Bitcoin jumped to more than 3,300 yuan. As of press time, the price has fallen back to around 2,750 yuan. The rapid price increase and the path of the correction are strikingly similar to the scene two years ago when Bitcoin jumped from 1,256 to 8,000.

The reporter interviewed the heads of major domestic exchanges and speculated that the huge fluctuations in Bitcoin prices this time were due to the recent popularity of the blockchain concept, the recovery of Bitcoin's accumulated trend over the past two years, suspected pyramid schemes, and speculation.

After two years, Bitcoin trend is picking up

The heads of several major domestic exchanges have stated that the price of Bitcoin has been quiet for two years since its peak of 8,000 yuan. After two years of accumulation,价格回暖Bitcoin is常态.
Hua Songxiu, CEO of China Bitcoin (CHBTC.com), said,

“This round of Bitcoin price increase is the result of多重因素. Bitcoin has been accumulated for several years, and more and more people recognize the value of Bitcoin. This is the most important factor in the price increase.”

BTCC.com CEO Li Qiyuan also agrees that the overall trend of Bitcoin is recovering:

"In the past two years, national banks around the world have been suppressing Bitcoin, telling users that Bitcoin is very risky. However, the advantages and scarcity of Bitcoin determine its value. It did not die in the winter of the past two years, and now Bitcoin has recovered. Next year, the block will be halved, and many people know that its value will increase greatly. Recently, many international users have registered with us, which is an overall change internationally."

A large number of newcomers enter the market, and MLM is inseparable

The heads of several domestic exchanges also revealed that the number of new registered users has surged since August and September this year, reaching the highest level this year since October. Li Lin, head of Huobi.com, revealed,

“From early October to early November, the number of visits to Huobi’s website increased tenfold. Huobi’s employees, especially the customer service team, were as busy as they were in November 2013, when the price of Bitcoin rose from 1,256 to 8,000.”

According to insiders, another important reason for the entry of many newcomers and the increase in prices is the unintentional promotion of a suspected pyramid scheme organization called MMM , which claims to be a decentralized financial mutual aid community.

Public information on the Internet shows that MMM is a decentralized financial mutual aid platform designed by Russian Sergey Mavrodi. It entered China in April this year and can be topped up in RMB. Participants can get a high monthly return of 30% by "seeking help" and "providing help", which attracted many players to participate.

In October this year, MMM officially announced that its international market can achieve a monthly profit of 100%, and the international market can only be recharged with Bitcoin. The international market is called "Super MMM" in the MMM team. Its income is different from the static profit of 30% per month of the ordinary market, but static plus dynamic. The static income is 20%, and each day's promotion task completed can increase the income by 2.67%. After completing the 30-day task, there will be an 80% income bonus, which adds up to a total of 100% income. Therefore, in order to obtain higher income, many MMM players are looking for channels to buy Bitcoin to play the international market.

According to insiders, many people have come to buy large amounts of Bitcoin recently, and when asked what they are using it for, they all say MMM. Domestic exchanges have also realized that the power of pyramid schemes cannot be underestimated, and have issued notices to warn against pyramid scheme risks.

It is not the first time that Bitcoin has been used in suspected pyramid schemes. The reason why Bitcoin is easily used by illegal activities is due to its anonymity, real-time, and decentralized features. MMM entered China in April this year, added Bitcoin as a payment option in August, and officially launched the international market in October, connecting MMM players around the world into a large network and becoming a powerful means to drive up the price of Bitcoin.

Leveraged trading methods are emerging frequently

Starting this year, in order to meet players' investment needs for different risk-return ratios, domestic exchanges have launched leveraged trading. Huobi and OKcoin have respectively launched five-fold leveraged trading this year, and the newly launched CoinNice exchange supports 20-fold leveraged trading as soon as it goes online.

At the recent Money20/20 forum, BTCC officially launched “Pro Exchange-Professional Trading”, providing traders with 20x leverage for spot trading.

Hua Songxiu, a Chinese Bitcoin expert, said that currently most Bitcoin trading platforms have three to five times leverage, and the returns of the same amount of capital will be magnified a lot when the price rises, and many users are happy to use it.

Blockchain concept prevails

Blockchain technology has recently attracted a lot of attention internationally and is one of the factors behind the rise in Bitcoin prices. This week, The Economist's cover story is titled "Blockchain - The Next Explosive Technology", which introduces the potential of blockchain technology. Blythe Masters, former CEO of JPMorgan Chase and current CEO of Digital Asset Holdings, has also been frequently exposed to the public because of blockchain. In the first half of this year, financial institutions such as Barclays Bank, Citigroup and Goldman Sachs also announced that they are exploring blockchain applications.

In China, public opinion seems to have recently begun to re-examine the value of Bitcoin and blockchain. On November 2, the Reference News, sponsored by Xinhua News Agency and edited and published by Reference News, also published an article titled "Why Trust Bitcoin", which stated that "the significance of blockchain goes far beyond cryptocurrency. Simply put, it is a machine for creating trust."

In recent public opinion, blockchain has been praised, but Bitcoin has never been mentioned. Regarding this, BTCC CEO Li Qiyuan believes:

“This is just a superficial statement. Of course, blockchain technology will certainly have many other applications in the future. Many people are disgusted by Bitcoin. Now it is called blockchain technology, and many people interpret ‘BTCC’ as blockchain technology and cryptocurrency. This is also good, but it is just a statement. We know that Bitcoin cannot be separated from blockchain, and the biggest application of blockchain is Bitcoin.”

But whether you admit it or not, promoting blockchain technology will undoubtedly attract more people's attention to Bitcoin.

There are ups and downs, so be cautious when investing

The seven-week consecutive rise in Bitcoin prices is not due to a single factor; speculation must be one of the factors that cannot be ignored.

When asked to speculate how long this rise will last, Hua Songxiu believes that

"In recent rounds of increases, the greater the increase, the higher the accumulated risk, but overall, due to the accumulation of Bitcoin in the past two years, perhaps more than 2,000 is a more reasonable price. I think it is okay to hold Bitcoin appropriately, but the premise is that it does not affect your own funds and the risk is controlled within your acceptable range."

Huobi CEO Li Lin’s advice to investors is:

“For new investors, we would like to remind you that there is no limit on the rise and fall of Bitcoin prices. You need to set up trading strategies based on the risks you can bear and invest with caution.”

Reporter: Meng Dada
Editor: Meng Dada
Source: Babbitt Information