by Nuno Menezes
On February 16, the bitcoin price reached a fresh high at $1043.21 following BTCC’s announcement, the largest Chinese bitcoin exchange, that it will be temporarily halting bitcoin withdrawals for one month. In fact, last week, OKCoin and Huobi, who are also some of China's major bitcoin exchanges, made similar announcements.
In the statement, BTCC addresses the current situation and states that it will need to go through an upgrading process to comply with the recent demands from the People’s Bank of China (PBoC). The company goes on saying the necessary upgrades should take a month, if not less.
A former governor of the PBoC said on local television that bitcoin would continue to exist in China on February 14, and, this seems to have eased the tensions. At the beginning of February, following reports of Chinese regulators stepping up pressure on the exchanges, the bitcoin price suffered a blow. However, the price reaction had an upside turn accompanying BTCC’s announcement, suggesting investors are not too worried about new rules or any other kind of interference from Chinese authorities.
The PBoC has been scouting Chinese bitcoin exchanges for some time now, and it has consistently demanded compliance with existing financial regulations. The government’s efforts to oversee Bitcoin are also causing certain concerns within the community. In a Reddit post one member says:
“They are not stopping withdrawals in order to upgrade AML. They are doing it to upgrade their bitcoin tracking systems. They will only allow them to withdraw to 'approved' wallets or approved addresses. This has nothing to do with money laundering and everything to do with currency control.”
These concerns are growing, but in general, everyone agrees that there is a need to apply specific rules for bitcoin exchanges. It is a little bit as if the shadow of Mt. Gox still hovers around and everyone is addressing a new concern regarding the percentage of fractional reserve bitcoin exchanges should have. This, in turn, brings up a lot of questions as to what sort of rules should be applied to bitcoin and cryptocurrency exchanges, and to how secure your coins are on an exchange and to which extent a bitcoin exchange is not a bank.
Following two other leading Chinese bitcoin exchanges, BTCC is now temporarily halting withdrawals while it upgrades its anti-money laundering systems. For now, the exchange will only halt bitcoin withdrawals until March 15, however, many traders are concerned that this period can eventually be extended.
The price surge seems to have slowed down and at the time of writing one bitcoin is being traded at $1,034.12 on Bitstamp. After breaking resistance around $995.21 on February 10, the market should tend towards fractal resistance at $1074.69.
— BTCMANAGER (@btc_manager) February 10, 2017
The market has found support around $1027, as shown by the 4-hour price chart below, aligning with the conversion line (blue). Also, the lagging line (purple) is starting to pierce upwards above the Ichimoku cloud, giving another bullish signal. Note how the conversion line has provided support for BTC-USD's run from sub-$1000 to the recent high over the course of three days. As long as the price action remains above the conversion line we should see bitcoin reach $1074.69.
The Ichimoku cloud indicates a support zone around $1000 and is starting to fan upwards, which is a sign that the upward trend will continue. Nevertheless, the psychological $1000 handle remains an important point of reference for the market. Therefore, it could be best to place limit buy orders anywhere within the cloud region, just in case there are any surprise interventions or reports that may unnerve market participants.