The Chinese over the counter OTC market indicates strong buy recently, as reported by CNledger, a prominent source for crypto-related news in China. This shows an overall rise in demand for Bitcoin by the Chinese despite the ban on cryptocurrency in the country.
Circumventing Crypto Ban In China
The Chinese government banned cryptocurrency and Bitcoin trading in the country in September 2017. But despite the ban, local publications including SCMP reported that there is still a significant crypto trading by the Chinese through the use of VPNs, stablecoins, and OTC markets.
Meanwhile, recently, a report surfaced on the increase in the volume of demand by the Chinese. As revealed by cnLedger, based on the official rate 1 USD presently worth around 6.72 Chinese yuan (CNY), While on over-the-counter (OTC) trading platforms and Asia-based exchanges like Huobi, 1 USDT is being traded at around 7 CNY, with a 4 per cent premium.
The ban on cryptocurrency trading in China has limited crypto traders in the country to the use of peer-to-peer (P2P) or over-the-counter (OTC) markets. Once investors acquire Bitcoin and USDT through an OTC exchange, then they can use VPN to trade on global cryptocurrency exchanges, engaging in crypto-to-crypto trades.
Chinese Investors Interest In Cryptocurrency
The sudden surge in the interest of the Chinese investors in Bitcoin is because of its use case. A crypto analyst known as light stated that the offshore functionality of cryptocurrencies like bitcoin, or essentially the store of value characteristic of bitcoin, is likely appealing to investors.
Most of the Asian countries such as China, South Korea, Malaysia, and others have strict capital controls in place. This makes it difficult for investors to transfer a large amount of money outside of the country without necessary approval and rigorous scrutiny. This makes Bitcoin the best option to serve the Chinese and other Asian countries for cross-border transfer.
Light explained that “We are witnessing a resurgence in Chinese demand for cryptocurrencies. This trend in the making comes after more than a year of relative quiet, a reminder of the time when Chinese volumes were king. For a variety of reasons not least of which are the volatility and offshore functionality, cryptocurrencies had taken hold of the Chinese investing public’s imagination. In late 2016, more than 90% of bitcoin volumes were paired against the Yuan.”
The surge in the Chinese demand for Cryptocurrency could be one of the causes of the recent bull trend of the crypto market. Also, Fundstrat Global Advisors head of research, Thomas Lee recently stated that the influx of Bitcoin whale is driving a recent surge of the crypto market.