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China Launches Bitcoin Crackdown: PBOC Will Probe Abnormal Investor Behavior “And Rectify Misbheavior”

from Zero Hedge:

Having long been advocates of Bitcoin (ever since Sept. 2015 when it traded at $230) for the simple reason that we were confident the digital currency would eventually become China’s favorite means of circumventing capital controls – precisely as has transpired – two months ago we warned that the unprecedented surge which made bitcoin the best performing asset in the past year with a 5x return, may be ending as “China Prepares To Impose Curbs, “Capital Controls” On Bitcoin.”

Since then, and especially over the past week, China has launched a series of incremental steps designed to do just that, which culminated on Friday when China’s central bank issued a statement calling the changes in the virtual currency “abnormal”, and said authorities have required the trading platform to operate in compliance. They urged the platform to “probe investors’ behavior and to “rectify misbehavior.”

The statement hit shortly after China FX regulators, SAFE, said it would begin scrutinizing fund outflows via Bitcoin, as China sought to close this final gaping capital outflow pathway.

Furthermore, according to China Daily, China’s financial services authorities required major executives of the Shanghai-based bitcoin trading platform BTCC on Friday to “rectify misbehavior in the trading of the virtual currency”, without clarifying precisely what this means, and to raise awareness of risks as the value of bitcoins experienced wild fluctuations.

China’s mass speculators flocked to the bitcoin market in recent days in a bid to gain from its fast appreciation, which rose 200% in 2016. However, after rising in near-exponential fashion over the past few weeks without any corrections, Bitcoin’s value fluctuated by more than 30 percent within the past two weeks as concerns of Chinese interference first emerged and were then confirmed. .The statement said authorities would like to reaffirm that the bitcoin as a virtual currency which cannot and shall not be regarded as currency in circulation.

* * *

It is unclear if the PBOC has successfully burst China’s latest bubble: According to data from the Shanghai-based bitcoin trading exchange, BTCC, more than 100 new investors started trading the virtual currency in the past three days, a fast growth compared to some 20 new investors before October in 2016.

“This trend shows that the bitcoin market’s appeal has been rising to a new level,” said a market review by BTCC dated Jan 4.

Feng Xin’an, 43-year-old sales manager with Shanghai-based Maoxin Trade Ltd, said he invested some 135,000 yuan ($19,515) in the bitcoin market as he regards bitcoin as a “haven asset”.

“The young generation, like my son and his friends, love to pay with digital currencies. Their demand for bitcoin can grow further, as I observe,” he said.

Meanwhile analysts continue to warn that bitcoin is not a tool that “guarantees” yield, and warn new investors who have limited knowledge, that entering the market blindly could be risky.

“Investors should always remember that bitcoin lost more than 75% of its value in 2013. We do not recommend it as a long-term investment tool, particularly because of compliance concerns,” said Zhang Yufang, investment adviser with Shanghai Shangding Investment Consultancy.

Then again, we are talking about Chinese bubble blowers: a legendary class of momentum chasers who will take any trend far beyond the level of max pain before allowing it to burst in a spectacular supernova of selling, in which the slowest sellers end up suicidal, either literally and metaphorically, before moving on to the next pre-bubble asset.

Following the PBOC statement, Bitcoin tumbled as low at 5,555 Yuan, or just above $800, before rebounding modestly as a new batch of BTFDers emerged.

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10 comments to China Launches Bitcoin Crackdown: PBOC Will Probe Abnormal Investor Behavior “And Rectify Misbheavior”

  • Windrunner58

    “Abnormal”, “risky”…..I’ll give you abnormal and risky. Fiat f**king paper notes, that is abnormal and risky. Hold them at your own peril over the next year or so.

    What else is “Abnormal and risky”, is the constant manipulation of precious metals, it is abnormal that they basically stagnate with the collapse, it is risky for TPTB, cuz the curtain and the Wizard behind it, are in for a wakeup call.

    Those pesky Chinese government officials. Every time something threatens their currency, it is considered risky. Get used to it, it will only become more mainstream over the next couple years as currencies flounder, and Banksters and Governments panic and move to cashless. Venezuela, India, Sweden, Finland, Greece anyone??? Italy, Spain, Christ all of Europe anyone. Oh…and soon to be us here in North Amerika.

    You cannot control what you do not hold.

  • Ed_B

    “Then again, we are talking about Chinese bubble blowers: a legendary class of momentum chasers who will take any trend far beyond the level of max pain before allowing it to burst in a spectacular supernova of selling, in which the slowest sellers end up suicidal, either literally and metaphorically, before moving on to the next pre-bubble asset.”

    Perhaps they are all reincarnated tulip mania investors? 😉

  • Craig Escaped Detroit

    Bitcoin headed over the cliff. Will it fall down to $200 each? Probably not.

    Will silver fall down to $9.oo ? Certainly not.

    Will gold fall down to $800 ? Certainly not.

    When the smoke clears, and the bathroom is breathable again, Gold will be no less than $5k to $500k and silver will be likewise.

    Paper dollars will be used as wall paper (just like the Zimbabwe $100 Trillion dollar notes, just like Indian Rupee notes, just like Venezuelan Bolivars).

    The real question will be “how few ounces of silver will it take to buy a brand new pickup truck from the dealer’s lot. How many month’s food can you buy with ONE ounce of silver.

    Considering how it’s possible to buy SIX months of food in Venezuela with just ONE ounce of silver, I think it’s safe to say that the PM’s will save the lives of people who got some.

    I’m running PART of a little experiment this month. I’m heating my home (1000 sq-ft) mobile home, with just a pair of electric space heaters operating at 600 watts each, and to add more heat to a cold room, I’m burning some kerosene lamps.

    I can also heat the room, with the lamps and with a kerosene space heater (10k BTU).

    right now, it’s +37F outside and +68-70F inside. I’m burning 4 lamps in the living room, and 2 lamps in the bedroom. I’ve got ONE 600w heater going in the living room, and another 600w heater in the bedroom. When it gets COLDER tonite (+26F), I may either fire up 2 more lamps or turn one heater at the 1000w setting.

    I’ve got an unused bedroom closed off.

    Electric [email protected] = 2046 BTU’s.
    Kerosene lamps = about 1000 BTU’s.

    This is a decent indication of how kerosene lamps can help you (and me) survive a “grid down” situation in the winter time.

    I looked up how many BTU’s a human body generates.
    At rest, sleeping, etc, from 225-250 BTU’s
    Mild, normal activity?= 300.
    hard work, highly active, up to 400 BTU’s.

    So, a single kerosene lamp (7/8″ wick), provides as much heat as about 4 (non active) people.

    ONE gallon of kerosene contains about 130,000 BTU’s of “energy” (about the same a DIESEL FUEL).
    A Gallon of PROPANE contains only about 90,000 BTU’s of heat.

    Consider a kerosene lamp putting out 1000 BTU’s, means a GALLON will give you 130 hours of burn time.

    I hope somebody finds this interesting or useful for the future.

    • Eric

      Blipcoin will never reach parity with Gold. Why?

      Simply because Gold is worth more. Central banks hold Gold. Not blipcoins.

      blipcoin should find support in the 750-800 range. But it’s still not worth anything.

      Gold will retest 1150. Then bang zoom!

    • glitter 1

      CED,

      Good info on the K Lamps.
      I was talking to my friend,who installed that Solar System last year and went into production during November.I asked how it was working? He said his electric bill last month was $7,that’s right $7.He lives in a ~ 3,000sqft Colonial.He said he should have his investment back within 3-4years.

      • Craig Escaped Detroit

        @giitter
        Your friend with the solar system & the $7 bill is putting his money into something that pays a great ROI & he gets to “hold it in his hands” and nobody can hit a computer key and make it disappear from his “account”.

        Most people ‘opt’ for the “grid tied/batteryless” systems, and that’s ok for most of the time, it eliminates the cost & hassle of the batteries, BUT, when the grid goes down, (most) batteryless systems will not supply power to the house even when the sun is brightly shining (because those systems are designed to shut down 100% when there is no grid power to sync up with.)

        There are some “hybrid” grid tied systems that allow having battery backup that will continue to run when the grid goes down. The “off grid” systems, are fully supported by a large battery bank & back up genny. Many jurisdictions, not only charge the monthly standard meter fees (sometimes as low as $7 per month), but some places put a 2nd meter on your home to separately calculate your “sell back” amounts, but they also charge you for that 2nd meter and other fees. It can rob a solar owner of all their savings.)

        In those jurisdictions, is makes much sense to be ‘off grid’ and avoid all the hidden robbery fees. In my Florida area, the standard monthly meter fee for everybody is $26/month. Ouch. (it’s a “co-op”, and the kw-hr fee is only $0.10 cents, so it’s OK) But when I finally get my ass going and install the solar stuff, I’m going 100% OFF grid to save those huge fees.

  • Craig Escaped Detroit

    UPDATE (cold nite last nite) of the Kerosene lamps-heating.

    It went down to +22F last night. In preparation for the “cold snap”, I had a total of 8 lamps lit, and had them set pretty bright (perhaps 1100-1300 BTU’s each). I was hoping the extra 2 lamps would keep it “decent” during the nite.

    I had been burning 6 lamps all day (and also running a total of 1200 watts of electric heating- which is equal to 4092 BTU’s. So when I went to bed, I figure all the lamps were adding about 9000 BTU’s into the home….BUT… within an hour of going to bed, I could easily detect that the house air had became TOO polluted.

    It’s hard to describe the feeling, even without any odors, there is some kind of heaviness in the air, and I knew I had to kill about 1/2 of all the burning lamps. It was just TOO much.
    Not likely for oxygen deprivation, but more likely invisible particulates as well as increase carbon MONOXIDE (that’s because YELLOW flames always give off “carbon monoxide”. Candles, lanterns, etc.)
    I had to increase the wattage of the electric heating to a total of 1600 watts to make up for the reduction of kerosene burning. The house air got cleaner and I slept well.
    I don’t know what this home’s “air exchange rate” is, but being a mobile home from 1986, it surely is NOT a “tight house”.

    When I woke up, indoor temp was 60F. Outdoor temp was +22F. (7am).

    So, in my 1000 sq-ft home, with K-lamps all over the place, I can safely burn (without getting over polluted), up to 6 lamps most of the time. More lamps for shorter periods, fewerlamps (perhaps as many as 5 or 6, all day).

    If your home is “tight”, you might not be able to operate 6 lamps in the same square footage.

    I also have some metal “hurricane lanterns” made by DIETZ. They are attractive, old farmer-Amish style lanterns. They throw plenty of light, BUT, the minute changes in the burner design, also creates a LOT more pollution. It makes me sad.

    I may TRY to bend and modify one of my Dietz Lanterns, try to make it put out LESS pollution so that if I ever use it to keep a “chicken coop or chick brooder” warm, I don’t want to KILL the birds with all that pollution from the lantern. It’s common “old farm” technology to use a kerosene lantern as a brooder-heater.

    Using the “big tank” style Dietz lanterns as a “plumbing heater” or greenhouse, etc, is great. The “big tank” models (called= Jupiter) can burn for up to 72 hours on a fillup. BUT, you still have to check it every 6-8 hours just in case the wick is getting burnt-clogged and needs to be trimmed again. If you’re using typical kerosene, you’ll need to trim them every 6-10 hours.

    I do NOT buy the expensive “store stuff” that costs $10 per gallon. I’m sure it burns cleaner, but I get standard (red dyed) kerosene for $2.99/gallon. I think it may be possible to burn diesel fuel in them, but it would probably be a lot more pollution.

    I will have to “test” the diesel fuel in ONE lamp to see how I like it or hate it, OR,… use it just for “greenhouse” nite warming to prevent a small green house from getting too cold.

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