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Not Accidental China's U-Turn On Bitcoin Mining Might Fuel Competition 101
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Changes in China’s Bitcoin (BTC) mining policy are not accidental, and competition in the global mining sector might become more intense, says an analyst at Beijing-based token data and rating agency TokenInsight. Moreover, the recent major crypto move by Hong Kong might also increase competition in the local cryptocurrency trading market, he added.

It’s a well-known thing in the Cryptoworld by now that China – though interested in blockchain, with even President Xi Jinping advocating for a faster development of blockchain technology – has taken and is maintaining a tough stance on cryptocurrency industry, particularly exchanges and mining. We’ve written about the country’s discussions on mining ban for a while now, but just two days ago, the National Development and Reform Commission (NDRC) reportedly removed Bitcoin mining from the list of industries that might be eliminated. Besides that, we know that China is thinking about their own digital fiat, and it was recently revealed that people in the country use WeChat and AliPay apps to buy crypto with cash.

Jack Yang, chief analyst at TokenInsight, finds that it’s not a coincidence that the new catalog for Guiding Industry Restructuring, which excluded Bitcoin mining, was finalized by the NDRC after the President’s speech on blockchain. Yang told

“It is not accidental, there is a causal relationship. After Xi’s statement on supporting the development of the blockchain, all levels of government have drafted laws and regulations related to blockchains and digital fire coins before the inventory. This revision is also the result of responding to national policies.”

Commenting on the meaning behind the NDRC’s recent move, Yang summarized it into three relevant points:

  • the country’s value for the Bitcoin mining industry is gradually recognized;
  • the mining industry’s compliance risk is gradually reduced;
  • mining-related companies can carry out normal operations.

“Mining competition is expected to become more intense,” says Yang, while more investments will be coming to China. He explains that this country has always been the center of mining: 70% of Bitcoin’s computing power is in China, while major companies in the design and manufacturing of mining machines, such as Bitmain and Canaan, are situated there. “This change in policy will promote the compliance of China’s digital currency mining industry,” he said, adding how more compliant, technically stronger companies that have greater capital advantages will wait for an opportunity to enter the industry and promote its further development towards transparency and compliance.

A financial port

Also, as reported, cryptocurrency exchanges can already apply to be regulated by Hong Kong’s Securities and Futures Commission (SFC), as it published a framework for crypto exchanges this past Wednesday.

The chief analyst finds that this “further demonstrates the Hong Kong government’s encouragement, support, and at the same time, the decision to simultaneously supervise and promote industry development,” adding that it’s expected for Hong Kong to become “the regional digital currency financial port.”

Competition in the industry will be seen here too, according to the analyst, but it will enter a new pattern, with more capital attempting to make its way to the Hong Kong cryptocurrency market. “The addition of giants may accelerate the concentration of this industry,” he says.

“The dividend of financial innovation will ultimately belong to companies that dare to actively embrace supervision, and belong to enterprises that can give up short-term benefits and continue to self-compliance.”

Additionally, Yang finds that Hong Kong’s securities regulatory system has always been ahead of that of the mainland, and that, for the development of the industry to be guided on the mainland, it’s expected that the internal regulatory agencies will move faster with the introduction of the supervision plans for virtual asset exchanges. “There is currently no trading platform licensed by the SFC, and the impact on the world is not obvious,” he concludes.

Nonetheless, Yang finds that the recent development indicates greater acceptance of digital assets as new financial instruments, but also a new course for the supervision of the cryptocurrency sector: from restricted to guided. STO (security token offering) “is the trend of the times,” says Yang, but the regulatory authorities of both Hong Kong and mainland China “should also cater to the development of society and supervise at an appropriate time so as to safeguard the interests of investors.”

As to how the industry will progress from here on in both places, Yang said that in the short-term, the regulators are expected to limit the high-leverage transactions such as futures. They will also focus on the regulation of the cryptocurrency trading platforms, regulating the secondary market transactions first, then establishing “risk prevention and control mechanisms through various means, and gradually expand[ing] the scope of supervision,” concludes Yang.

As reported, the SFC has also published a warning this week, as they’re “extremely concerned” about platforms which offer virtual asset futures contracts to the public, especially contracts which are highly leveraged.

Sead Fadilpašić , 2019-11-08 16:04:00 ,

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.

While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock

Nick Chong , 2019-11-10 12:00:38

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