China is notoriously hostile towards cryptocurrencies, and has taken a number of measures to clamp down on the industry. In response to this, the country’s state-run media has begun to take a firm stance, and have published articles criticising Bitcoin trading and even calling for stricter supervision.
Bitcoin and other digital currencies are in the limelight as they have received the attention of the world’s mainstream media in recent months. Even the state-run China Central Television (CCTV) has issued a video interview against Bitcoin trading, calling it a pseudo-currency and saying it will be harder to regulate and supervise in the future.
China’s state-run media has slammed Bitcoin trading, calling for stricter monitoring and more supervision.Following the bitcoin mining debacle in China earlier this week, Xinhua News, the official news agency of the People’s Republic of China, today published a new article highlighting the risks of trading cryptocurrencies. The publication’s authors first explained how leveraged trading works, a method in which users essentially borrow money from the stock market, allowing them to trade with much more money than they actually have. While this can lead to significant profits, it can also lead to losses if the market moves against a leveraged position. What is shocking is the possibility of a maximum leverage of 125 times on some platforms, writes Xinhua, using a screenshot of cryptocurrency exchange Binance as an illustration.
Large gains are accompanied by large volatility
Xinhua claims that for many crypto traders, huge but short-lived gains led to an equally rapid loss of investment in the recent market crash. As an example, the publication cited Liu Peng, reportedly a veteran crypto investor who has earned more than 100,000 yuan ($15,700) since the beginning of the year, but lost it all in the blink of an eye. I took a 5X leveraged contract for about $39,000. I thought it was perfectly safe and did not expect elimination. No one thought bitcoin would fall so much, Peng complained. Another investor named Zhou told Xinhua that he managed to convert his 500,000 yuan ($78,500) into 3 million yuan ($471,000) in January. However, he lost a significant portion of his winnings on the 19th. May, when news from China ironically contributed to the collapse of the crypto-currency market itself. Unwilling to accept the loss, Zhou increased his leverage to 10x and bought a drop (as he assumed at the time) – but his position was closed an hour later. Today, looking back, the whole process is like a dream, he told Xinhua.
The agency also pointed to the risk of possible manipulation of the cryptocurrency market, saying local investors often turn to offshore exchanges to circumvent China’s restrictions. Meanwhile, some experts quoted by Xinhua argue that citizens should be educated so they can recognize and avoid risks when dealing with cryptocurrencies. International regulatory cooperation should be strengthened and problems, including the difficulties of cross-border supervision of virtual currencies, should be studied, Xinhua concludes.
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China is the world’s largest Bitcoin trading market and the cryptocurrency’s popularity there has gone through the roof. But Bitcoin is no longer the darling of the Chinese investors. A recent editorial by the state-run Global Times newspaper slammed the cryptocurrency and called for stricter supervision over its trading.. Read more about latest news on cryptocurrency and let us know what you think.
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