Bitcoin price is maintaining a strong position at $1,060, which was considered an all-time high value for four straight years since 2013, prior to the fall of Mt. Gox.
A large factor behind the speedy recovery and strong performance of Bitcoin price has been the resilience of the Chinese market and the development of the Japanese Bitcoin exchange market, that has transformed into a global powerhouse over the past few months.
The Japanese market outpaced the US and Chinese Bitcoin markets
On Feb. 17, in an article entitled “Size Matters: Japan Becomes Largest Bitcoin Exchange Market, Beats China and US,” Cointelegraph reported that the Japanese market outpaced the US and Chinese Bitcoin markets to become the largest Bitcoin exchange market in the world with a $135 mln daily trading volume and a 50 percent market share.
The exponential growth of the Japanese Bitcoin market can be attributed to two major events: the introduction of efficient regulatory frameworks by the Japanese government and the temporary suspension of Bitcoin withdrawals by two leading Chinese Bitcoin exchanges Huobi and OKCoin.
Traders from China moving to Japanese Bitcoin exchanges
While many feared that the Bitcoin price would be largely affected by the suspension of withdrawals and the People’s Bank of China’s deep involvement in the local Bitcoin exchange market, the global Bitcoin exchange market continued to prosper, with many traders from China moving to Japanese Bitcoin exchanges and the rest migrating to peer-to-peer platforms such as LocalBitcoins to trade Bitcoin directly on a peer-to-peer basis.
As a result, the volumes of both Japanese Bitcoin exchanges including bitFlyer and LocalBitcoins China exploded. This past week, restrictions of the PBoC pushed the LocalBitcoins China trading volume to 5,000 Bitcoins per week, which is equivalent to $5.3 mln in weekly trades.
Why Bitcoin price fell and recovered quickly
To understand how and why Bitcoin price fell and recovered quickly in the past few weeks, it is important to acknowledge that Chinese traders and investors have realized many methods exist apart from local Bitcoin exchange trading platforms to purchase or sell Bitcoin.
Peer-to-peer trading platforms such as LocalBitcoins is one of many ways to trade Bitcoin and migrating to properly regulated markets like Japan is also a favorable method.
This recognition from local investors and traders on the global Bitcoin trading market allowed the Bitcoin price to recover and maintain a strong position at $1060.
The Chinese government and Bitcoin exchanges have also announced the formation of a regulatory alliance focused on Bitcoin, to discuss potential regulatory issues and growth-related conferences with the local Bitcoin community.
The announcement from Chinese financial regulators led Chinese investors and traders to become more optimistic towards the relationship between local exchanges and regulators, instead of fearing the involvement of PBoC.