Traders from China Invest in Bitcoin with a Huge Premium


From US-China Investment News contributor Kaya Johnson

It’s no longer a secret that Bitcoin trading is immensely popular around the world, even though more and more governments condemn such activities. This was also the case for China, where the local government tried to discourage everyone willing to invest in Bitcoin but even so, the traders went ahead and invested with a huge premium.

    1. The Price Keeps Rising

It’s really hard to imagine anyone not being interested in Bitcoin trading considering that it approaches the $6000 mark. And big names in the industry, such as Mike Novogratz, predict that it will continue rising since a lot of institutions start getting involved in Bitcoin trading. With such a promising increase, it’s no surprise that, even though exchanges of cryptocurrency will be banned in a near future, investors and traders from China rushed to make a profit.

    1. Main Chinese Bitcoin Trading Tools

Most of the Bitcoin trading in China goes through their main processors, Huobi and OKCoin that reached an all-time high on the 13th of October when they traded at 6013 dollars. This happened mainly because of the sudden demand for Bitcoin on the local markets. Even so, it’s amazing how on other really big Bitcoin markets, the price was still around 5800 dollars. So why the Chinese investors are able to benefit from premiums of over $200?

    1. Reasons for These Unusually High Premiums

Since the father of the cryptocurrency is Satoshi Nakamoto, there’s no wonder that the Asian markets are the most successful when it comes to trading and mining. Even so, towards the end of 2016, the market in South Korea also had very attractive premiums as compared to countries like the US or other European trading markets. But the premiums in South Korea could only reach a certain level that can’t really compare to the level China is operating at. The CEO of a South Korean fintech company stated that unlike China where the mining operations are taking advantage of the government interference and the low cost of energy, South Korea can’t really mine properly.

Another explanation for the level reached by Bitcoin premiums in China is that after the appearance of a rival cryptocurrency, Ethereum, the competition that sparked between the two currencies made things really explode for the older one. Indeed, Ethereum is just beginning its journey towards greatness, however, the simple fact it has appeared on the market as a solid alternative made the sympathizers of Bitcoin push the investments so hard that it reached record-breaking values.

    1. How Does the Future Look?

Well, even though things are looking pretty good right now for the Chinese investors when it comes to Bitcoin, the fact that major exchanges will have to close business is actually a good thing. The huge mining capacities and the fact that the market is quite unstable generates a high demand for the cryptocurrency, leading to high premium rates.

The bottom line is that nobody can predict exactly how the cryptocurrency is going to evolve over the future years. On the one hand, you have a lot of CEOs and governments that go against it but on the other, you have huge companies like Tesla allowing you to buy their cars using the cryptocurrency so it’s really a tie for the moment.