By
Godfrey Benjamin
April 16th, 2024
Chinese leading trading platforms have imposed halts on withdrawals resulting in traders flocking to peer-to-peer marketplaces to continue buying and selling bitcoin.
Peer-to-peer Bitcoin hub LocalBitcoins has set a new global all-time high across its platform. Coin Dance informs that last week was the busiest in the marketplace’s history, with over $24 mln in transactions – this is almost $5 mln higher than the week before as a result of China’s reaction to the decision of exchanges to halt Bitcoin withdrawals due to regulatory pressure.
The situation in China continues to be uncertain. As leading bitcoin exchanges in the country were to hold up withdrawals and other checks to appease the regulator, bitcoin traders started looking for ways out. They are apparently flocking to peer-to-peer marketplaces to continue buying and selling the cryptocurrency.
LocalBitcoins is one of the longest established peer-to-peer marketplaces. It plays the role of some kind of directory for buyers and sellers to find each other. There are possibilities for users to meet in person, on chat platforms, or talk on the phone to arrange exchanges involving the cryptocurrency.
LocalBitcoins operates in the following way. A user only needs to install the initial contact with a buyer or seller and each next time he wants to make a deal, he can get in touch directly. Thus, there is no need to use the platform every time they make a trade.
This operational principle means that LocalBitcoins may undercount the value of transactions it facilitates. Moreover, we should also take into account the plenty of peer-to-peer trading going on in WeChat chatrooms and other informal marketplaces where volumes aren’t captured.
The last week showed the explosion of Chinese Yuan volumes on the marketplace. Trading on LocalBitcoins currently accounts for about 6% of the total trading volume in yuan.
Yuan trading on Bitcoin exchanges has plummeted. However, it is necessary to say that we might misread the situation as users used to place trades on Chinese exchanges for free. Thus, the number of trades might be inflated. Platforms in Japan now tend to adopt this practice, and yen trades currently dominate global volume.
The Bitcoin price has recovered after the Chinese central bank’s initial clampdown. Currently, the Bitcoin is valued at more than double its price a year ago.
The Bitcoin price has been keeping close to $1,000 barrier for a while after the meetings between the People’s Bank of China and Chinese Bitcoin exchanges, which resulted in increased speculations about the prospects of Bitcoin development in the Asian market. The Chinese leading exchanges announced then that all Bitcoin withdrawals would be suspended indefinitely.