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You are here: Home / Economics / C.R.E.A.M. / #BitcoinUpheaval Open Thead, Part Infinity – 1

#BitcoinUpheaval Open Thead, Part Infinity – 1

by Anne Laurie|  June 22, 20218:57 pm| 65 Comments

This post is in: C.R.E.A.M., Foreign Affairs, Show Us on the Doll Where the Invisible Hand Touched You

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China tells banks to stop supporting Cryptocurrency https://t.co/t2fGls99w2

— BBC News (World) (@BBCWorld) June 22, 2021

… On Monday, China’s central bank said it had recently summoned several major banks and payments companies to call on them to take tougher action over the trading of cryptocurrencies.

Banks were told to not provide products or services such as trading, clearing and settlement for cryptocurrency transactions, the People’s Bank of China said in a statement.

China’s third-largest lender by assets, the Agricultural Bank of China, said it was following the PBOC’s guidance and would conduct due diligence on clients to root out illegal activities involving cryptocurrency mining and transactions.

China’s Postal Savings Bank also said it would not facilitate any cryptocurrency transactions.

The mobile and online payments platform Alipay, which is owned by Chinese financial technology giant Ant Group, said it would set up a monitoring system to detect illegal cryptocurrency transactions…

China accounted for around 65% of global Bitcoin production last year, with Sichuan rating as its second largest producer, according to research by the University of Cambridge…

Chinese regional government bans bitcoin mining, electrical demand reduces by 8 GW.

That's 2-4 modern nuclear plants, or a couple of large hydro dams. It's enough to run many whole countries, or a bit more than London. https://t.co/pdlcYUNZ40

— Simon Waldman (@simon_on_energy) June 19, 2021

https://t.co/XyvhDAxmUZ

— Gerry Shih (@gerryshih) June 21, 2021

one of the main points of bitcoin mining in China was to get money out of the country – buy electricity in yuan, sell bitcoin for dollars. Doesn't transfer elsewhere for any number of reasons, but that's one big one. https://t.co/0ZK7U7FvzD

— James Palmer (@BeijingPalmer) June 21, 2021

BE NOT AFEARED!, insist professionals with an interest in keeping cryptocurrency investments busy…

… Bitcoin’s brief drop below the symbolic price threshold of $30,000 on Tuesday has reignited talk of a crypto winter. It doesn’t help that cryptocurrencies like dogecoin, XRP and others saw sharp drops in the last 24 hours.

But experts tell CNBC that bitcoin’s fundamentals are good, and the market conditions in 2021 are very different than the last big crypto crash in 2018.

“We are far from a bear market, only traders are freaking out over technicals seen on exchanges like volumes and price action,” said popular on-chain analyst and statistician Willy Woo.

Bitcoin’s rise in the last 12 months has had a lot to do with the billionaires and corporations that are buying bitcoin in big amounts. The surge in interest from mainstream financial players has not only reformed bitcoin’s image but has also fomented a supply shortage, which helped drive up the price of the token….

Bitcoin bulls insist the underlying fundamentals of bitcoin are much stronger in 2021, than they were during its last bear market in 2018.

“It’s the bitcoin blockchain’s more than a decade of unblemished security, bitcoin’s breadth of utility, and the level of adoption that establish bitcoin’s intrinsic value,” said Alyse Killeen, founder and managing partner of bitcoin-focused venture firm Stillmark.

That last point is particularly important — bitcoin adoption is on a tear, creating a broader group of users who believe in the currency’s value, which reinforces it…

The Struggle is real
#buythedip #btc #cryptocrash pic.twitter.com/bcA7y36ndP

— Nahil Shaik (@nahilshayk) June 21, 2021

The cynics’ view:

Because Bitcoin especially (through the Tether fraud) and cryptocurrency more generally is a pyramid scheme, of course Wall Street and venture capital need it to go mass market. It's the only road to getting out of their current investment at a profit https://t.co/ksqMNQKFWy

— Pinboard (@Pinboard) May 30, 2021

What we especially need to stress to regulators is that there's no relationship between the technical claims of cryptocurrency and our now over 13 years of experience. It's not decentralized, it's not a currency, it's not a store of value, and it's not a promising technology

— Pinboard (@Pinboard) May 30, 2021

Some of the smartest minds from the top schools engineered the mortgage-backed securities and credit default swaps that led to the GFC, not a great yardstick to judge things by https://t.co/nYbdFLTrQa

— James Medlock (@jdcmedlock) June 1, 2021

Of course, for ‘inconspicious’ value transfer, there’s always the classics…

Sotheby's announced that a 101.38-carat pear-shaped flawless diamond can be bought at auction next month using cryptocurrencies https://t.co/eACFQGOj9X pic.twitter.com/GctmJZVFeG

— Reuters (@Reuters) June 22, 2021

#BitcoinUpheaval Open Thead, Part Infinity - 1

(NonSequitur via GoComics.com)
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Reader Interactions

65Comments

  1. 1.

    eataTREE

    June 22, 2021 at 9:00 pm

    I am extremely loath to praise the Chinese ruling party, but, stopped clocks, etc.. Bitcoin should be illegal.

  2. 2.

    Baud

    June 22, 2021 at 9:06 pm

    Cryptocurrency is sustained by a mix of money laundering, vaporware, fraud, ransomware, gambling, and delusion. It has no social benefit except helping end first dates fast

    Not too different from Balloon Juice.

  3. 3.

    Roger Moore

    June 22, 2021 at 9:07 pm

    I’m starting to think cryptocurrency is less a bubble than a zombie. It’s going to keep shambling on, eating people’s brains long after it ought to be dead.

  4. 4.

    CaseyL

    June 22, 2021 at 9:08 pm

    Texas has already put out the welcome mat for bitcoin mining, and now Florida.

    A state whose economy depends on extractive industries, and a state whose major economic activity is fraud.

    A match made in heaven.

  5. 5.

    Kent

    June 22, 2021 at 9:09 pm

    Yes, good for China.

    When you can get a 30-year mortgage or a 10-year bond denominated in bitcoin, then we will know it is a real currency.  Until then it is just nothing but a speculative asset with no real backing or purpose.  At least tradable commodities like pork bellies and oil futures are based on real things.  As are stocks.  But bitcoin?

  6. 6.

    Kent

    June 22, 2021 at 9:10 pm

    @Baud: Yes but balloon juice has dogs.

  7. 7.

    Just Some Fuckhead

    June 22, 2021 at 9:12 pm

    It almost seems like China leadership helped engineer a magic money bubble for the imperialist dogs and is now pulling out the rug..

  8. 8.

    lurker

    June 22, 2021 at 9:13 pm

    @Baud: have not really noticed much ransomware on the site, unlike the rest of that list…

    hmmm…

    starting to see the flaw in Cole’s business model…

    ; – )

  9. 9.

    Baud

    June 22, 2021 at 9:13 pm

    @Kent:

    Are we like Dogecoin then?

  10. 10.

    karen marie

    June 22, 2021 at 9:14 pm

    I’m waiting for the next episode of “Exit Scam” to drop. Interesting listen,  and a warning to anyone thinking of being played a fool

     

    “unblemished security”

     

    Hahahahaha.

  11. 11.

    SiubhanDuinne

    June 22, 2021 at 9:14 pm

    @eataTREE:

    Even TFG doesn’t like or trust cryptocurrencies. First, and probably last, time in my life I will have agreed with him.

  12. 12.

    lurker

    June 22, 2021 at 9:15 pm

    @Just Some Fuckhead: might also mean they got what they wanted out of it –

    investments in server farms with lots of GPUs, whatever their lucky investors got out of it before any announcements, some lease payments, etc.

    and are now pulling the plug…

  13. 13.

    dmsilev

    June 22, 2021 at 9:15 pm

    @Kent: Hell, I’d settle for “can buy a pizza denominated in Bitcoin, without first converting to dollars”. Except, of course, the global capacity of the bitcoin network is a few transactions per second, so not so great for an actual currency.

  14. 14.

    Roger Moore

    June 22, 2021 at 9:16 pm

    @CaseyL:

    The problem is pointed out by James Palmer above.  Bitcoin miners in China could buy everything in Yuan but spend their Bitcoin wherever they chose, thus evading Chinese restrictions on moving their capital overseas.  That doesn’t work in Texas or Florida.  Besides, who would want to put a heavy consumer of electricity in Texas?  It’s not exactly synonymous with reliable electricity supplies these days.

  15. 15.

    lurker

    June 22, 2021 at 9:18 pm

    @SiubhanDuinne: he does not like sharks either – not crazy about those things when i am in the water

    …

    worth keeping in mind, he has opinions on everything – just ask him – and those opinions change depending on when he is asked.  Law of averages is going to get you to agree with him at some point, even if he is as consistently wrong as he tends to be – his changing opinions on things he does not care about (basically anything but him) make the whole attempt to evaluate his opinions meaningless.

    ETA: he is the epitome of often wrong, never in doubt (at least for his public persona) – guy clearly does not believe in anything so he is likely always in doubt internally.

  16. 16.

    trollhattan

    June 22, 2021 at 9:24 pm

    Somebody tell me it’s nuts to imagine the Navajo Generating Station being revived to run crypto mines. All that coal, sitting around, unburnt. Those stacks, with no emissions flowing to freedom.

  17. 17.

    Gvg

    June 22, 2021 at 9:24 pm

    @Roger Moore: Florida doesn’t have that much excess energy either. I mean, we don’t have brown outs, our black outs are storms and usually short, but frankly I don’t know of anywhere that has that much excess capacity. IF crypto currency’s keep going anywhere, I would think they should decentralize.

    and anywhere with fraud laws and banking reporting is going to come after them.

  18. 18.

    Ruckus

    June 22, 2021 at 9:25 pm

    @CaseyL:

    Texas can’t provide electricity in cold or hot weather, what are they going to do when shitcoin mining gets going full strength? Oh that’s right they are just producing enough power to work under ideal conditions now.

    I predict that 2 things will happen. First, no one is going to move a cryptocurrency operation to TX. Second, if one does, it will blow up TX electric production in about 2 days.

  19. 19.

    CaseyL

    June 22, 2021 at 9:26 pm

    @Roger Moore:

    Besides, who would want to put a heavy consumer of electricity in Texas?

     

    The folks running Texas are absolutely corrupt enough to grant bitcoin companies first-dibs on utility usage. I’m not sure how they would do it, technologically/mechanically, but if they can, they will.

    The bit-coiners get power and nobody else does.

  20. 20.

    Roger Moore

    June 22, 2021 at 9:26 pm

    @Just Some Fuckhead: 

    It almost seems like China leadership helped engineer a magic money bubble for the imperialist dogs and is now pulling out the rug..

    It could also mean Xi Jinping is taking a page from Trump’s book by causing Bitcoin to tank when he wants to take a position himself.

  21. 21.

    Ken

    June 22, 2021 at 9:32 pm

    But experts tell CNBC that bitcoin’s fundamentals are good,

    As solid as they ever were. But what really catches my attention is “experts”, because it reminds me that a couple of decades ago we had experts in the valuation of beanie babies, who wrote articles to help fill the pages of at least two monthly magazines devoted to collecting and trading the toys. I sometimes wonder what those people put on their resumes.

  22. 22.

    lurker

    June 22, 2021 at 9:35 pm

    @Roger Moore: excellent point

    plus, Trump had an alleged pump and dump scheme at some point in the late 80s, before enough investors got wise that he never followed through on his announcements of plans to take over companies

    so the chinese move is potentially following along in his tracks, regardless of their approach, because the guy has done so many ridiculous things.

    Apparently, regardless of what you do wrong, at this point, Trump likely did it first.

     

    (shaking head in amazement)

  23. 23.

    Just Some Fuckhead

    June 22, 2021 at 9:36 pm

    @Ken: “Capitalist”

  24. 24.

    Suzanne

    June 22, 2021 at 9:37 pm

    @Baud: No lie, Mr. Suzanne and I discussed our favorite internet places on our first date, and he told me about this place. Thirteen-and-a-half years later, and I’m still freakin’ here.

  25. 25.

    NotMax

    June 22, 2021 at 9:39 pm

    FYI. As a certain Mr. Solo opined, “I got a bad feeling feeling about this.”

    The Hawaiʻi Theatre Center […] announced that it has started accepting donations in several cryptocurrencies as part of a campaign to raise $10,000 to underwrite an upcoming performance.

    Cryptocurrencies that will be accepted include:

    Bitcoin (BTC), Ethereum (ETH), Amp (AMP), Basic Attention Token (BAT), Bitcoin Cash (BCH), ChainLink (LINK), Dai (DAI), Dogecoin (DOGE), The Graph (GRT), Gemini Dollar (GUSD), Litecoin (LTC), Storj (STORJ), UMA (UMA), Zcash (ZEC), 0x (ZRX) and 1inch (1INCH). Source

  26. 26.

    ?BillinGlendaleCA

    June 22, 2021 at 9:43 pm

    @Baud: I think the BJ-Coin would be real  popular in college dorms.

  27. 27.

    Mike J

    June 22, 2021 at 9:44 pm

    “a decade of unblemished security,”

    Tell that to the ransomware gang that lost 80% of their take to the feds.

  28. 28.

    Gravenstone

    June 22, 2021 at 9:47 pm

    @SiubhanDuinne: Only because he never figured out a way to get a cut from them.

  29. 29.

    Another Scott

    June 22, 2021 at 9:54 pm

    @Mike J:

    Mt. Gox:

    Mt. Gox announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time.[9][10] Although 200,000 bitcoins have since been “found”, the reasons for the disappearance—theft, fraud, mismanagement, or a combination of these—were initially unclear. New evidence presented in April 2015 by Tokyo security company WizSec led them to conclude that “most or all of the missing bitcoins were stolen straight out of the Mt. Gox hot cryptocurrency wallet over time, beginning in late 2011.”[11][12]

    Unblemished!!1

    Cheers,
    Scott.

  30. 30.

    Jim, Foolish Literalist

    June 22, 2021 at 9:55 pm

    Manu Raju @mkraju 3h
    NEWS: Pelosi just announced to Democrats that she will create a select committee to probe Jan. 6 attack, per two sources familiar

  31. 31.

    planetjanet

    June 22, 2021 at 9:59 pm

    @Jim, Foolish Literalist: ​
     That story was quickly walked back. Pelosi said she would decide later this week.

  32. 32.

    JoyceH

    June 22, 2021 at 10:03 pm

    @Mike J: ​
     

    “a decade of unblemished security,”

    Tell that to the ransomware gang that lost 80% of their take to the feds.

    Exactly what I was thinking! I thought the whole point of these crypto currencies was that they were untraceable, which made them valuable for people buying and selling illegal things. But if the feds can track it and seize it, then what’s the point?

  33. 33.

    Jim, Foolish Literalist

    June 22, 2021 at 10:03 pm

    @planetjanet: ah, thanks, haven’t seen that tweeted, which is how I follow news now

  34. 34.

    Anne Laurie

    June 22, 2021 at 10:04 pm

    @Ken: But what really catches my attention is “experts”, because it reminds me that a couple of decades ago we had experts in the valuation of beanie babies, who wrote articles to help fill the pages of at least two monthly magazines devoted to collecting and trading the toys. I sometimes wonder what those people put on their resumes.

    That their talents made them key players in a highly successful marketing campaign.   Not their problem they were selling a pyramid scheme to the gullible…

    Look, I am a lifetime ‘collectible’ buyer, but I’ve never been naive enough to think of my toys as ‘investments’.   There’s a solid core of crytobelievers who buy their tokens for the same reason I still have some wildlife-artist collector plates; they make me happy, and my having them doesn’t hurt anybody.   When the whole cryptocurrency market implodes (goes underground), there will still be honest ‘collectors’ swapping hot tips with each other, and snickering at us normies who Just. Don’t. Get. It!

  35. 35.

    planetjanet

    June 22, 2021 at 10:05 pm

    @Jim, Foolish Literalist: A lot of places got it wrong.

    https://www.washingtonpost.com/powerpost/congress-jan-6-riot-capitol-investigation/2021/06/22/34a99470-d3ac-11eb-9f29-e9e6c9e843c6_story.html

  36. 36.

    bbleh

    June 22, 2021 at 10:06 pm

    It’s disruptive!  It must be worth trillions!

  37. 37.

    lurker

    June 22, 2021 at 10:09 pm

    @Anne Laurie: have family members with hummels (sp?), lladros, precious moments, etc.  Not convinced most of them really believed they would appreciate in value, other than one or two incurable optimists.  there is some sort of a market out there for some of them…

  38. 38.

    Steve in the ATL

    June 22, 2021 at 10:10 pm

    @Ken: my dog ate a beanie baby kitten earlier this evening.  He feels no guilt, but then he may not have known it was a valuable collectible.

  39. 39.

    James E Powell

    June 22, 2021 at 10:13 pm

    @Jim, Foolish Literalist:

    Her spokesperson backed up on that & said she would decided whether to pick a select committee by the end of the week. Reportedly, she was giving the senate time to work through the pursuit of Broderhood.

    Let’s get ready to rumble.

    I mentioned this in an earlier post, but I want to repeat it because I think we – and that definitely includes me – sometimes overlook the skills & knowledge of our team. Biden, Pelosi, and Schumer are our best Top 3 since the Johnson administration when it comes to understanding what can be done and how to do it in Washington DC.

  40. 40.

    Just Some Fuckhead

    June 22, 2021 at 10:14 pm

    @Steve in the ATL: I’ve got containers full of beanie babies in the attic if you want to replace it. $120 million dollars apiece, a full billion for a set. I’m practically giving these things away.

  41. 41.

    Just Some Fuckhead

    June 22, 2021 at 10:16 pm

    @James E Powell:

    Biden, Pelosi, and Schumer are our best Top 3 since the Johnson administration when it comes to understanding what can be done and how to do it in Washington DC.

    lol, you are killing it tonight.

  42. 42.

    Enhanced Voting Techniques

    June 22, 2021 at 10:18 pm

    @Just Some Fuckhead: It almost seems like China leadership helped engineer a magic money bubble for the imperialist dogs and is now pulling out the rug..

    Oh the suckers in this deal are the Chines people; go look up the whole Chines ghost cities thing, it’s basically a giant housing bubble with empty, badly made apartments being sold back and forth with the Chine’s government encouragement and support.  Cryptocurrency sounds like the CCPs idea of a sound investment.

  43. 43.

    Kineslaw

    June 22, 2021 at 10:19 pm

    @Ruckus: Texas is a great place for solar and wind power, so a bitcoin mining operation wouldn’t necessarily be too reliant on the power grid.

    Another thing Texas doesn’t have excess of is water.  Cooling a Bitcoin mining operation must take a lot of it, which would be the other issue.

  44. 44.

    Anne Laurie

    June 22, 2021 at 10:21 pm

    @Just Some Fuckhead: I’m practically giving these things away.

    That’s why you have grandkids.  They’re too young now, but in a few years, they’ll be able to mock Granpa’s weird vintage obsessions.

    (Seriously, one advantage to Beanie Babies over porcelain: When the BB market collapsed, a lot of nice middle-class ladies donated their collections to shelters & community centers, where the kids were only too happy to have nice ‘new’ toys… )

  45. 45.

    Another Scott

    June 22, 2021 at 10:29 pm

    @James E Powell: 

    But even after her denial, a source who heard the speaker said she had indicated she had given the Senate a few weeks to act and that the existing House committees are too big and unwieldy. Select committee will be named, the source said

    — Manu Raju (@mkraju) June 22, 2021

    I guess we’ll see.

    The Speaker isn’t going to let 1/6 fade away.

    Cheers,
    Scott.

  46. 46.

    sab

    June 22, 2021 at 10:39 pm

    @Anne Laurie: Gosh darn. So my beanie baby manatee has become worthless?

  47. 47.

    Another Scott

    June 22, 2021 at 10:40 pm

    I wish Yang the best of luck in his bid to replace Gov. Newsom.

    — Richard M. Nixon (@dick_nixon) June 23, 2021

    Cheers,
    Scott.

  48. 48.

    Gary K

    June 22, 2021 at 10:44 pm

    Willy Woo

    Sometimes the scriptwriters are so obvious.

    ETA: I’m thinking of “new age pseudo-scientific babble.”

  49. 49.

    Captain C

    June 22, 2021 at 10:44 pm

    @Kent:

    no real backing or purpose.

    It’s about as close to an abstract, pure Greater Fool item as we can get in the real world.

  50. 50.

    mrmoshpotato

    June 22, 2021 at 10:47 pm

    @Ruckus:

    it will blow up TX electric production in about 2 days. 

    Days?  LOL!  I give that shitshow 2 hours – tops.  The only question is if Texans will freeze or fry?

    Good on ya with an isolated grid, ya Texass slapdicks!

  51. 51.

    phdesmond

    June 22, 2021 at 10:52 pm

    @Anne Laurie:

    soft sculpture is more comforting

  52. 52.

    Matt McIrvin

    June 22, 2021 at 10:59 pm

    @Anne Laurie: The Beanie Babies phenomenon inspired a Berenstain Bears book called “The Berenstain Bears’ Mad, Mad, Mad Toy Craze” which is, I kid you not, the best (perhaps the only) child-accessible explanation of a speculative bubble I’ve ever heard of.

  53. 53.

    Anne Laurie

    June 22, 2021 at 11:09 pm

    @phdesmond: No lie:  There were news stories about middle-school kids delighted with their first name-brand, unused toys — it made the kids feel valued.

    And Beanie Babies were small enough to fit in a backpack or a tote, even when that backpack had to hold all their worldly possessions.

  54. 54.

    Hkedi [Kang T. Q.]

    June 22, 2021 at 11:32 pm

    @CaseyL: I will watch Texas with great glee as the bit-coin miners flock to the state, which has it’s own state-regulated interconnect (that worked SO well this winter, and it looks like there might be a reprise in the height of summer).  I’m sure NOTHING bad will happen as the miners add a couple of Gigawatts of load quickly to a system that is held together by duct tape, bailing wire, and donations to conservatives.

  55. 55.

    Hkedi [Kang T. Q.]

    June 22, 2021 at 11:37 pm

    @lurker:

    have not really noticed much ransomware on the site, unlike the rest of that list…

    hmmm…

    Peloton (maker of expensive treadmills) has moved into that market recently.  Due to a “recall”, anyone who bought a $3K treadmill now needs to pony up $40/month or have their purchase bricked.

    https://www.bleepingcomputer.com/news/technology/peloton-tread-owners-now-forced-into-monthly-subscription-after-recall/

  56. 56.

    Hkedi [Kang T. Q.]

    June 22, 2021 at 11:44 pm

    @trollhattan: Thankfully, it’s deep into it’s de-commissioning. You would basically have to re-build most of the plant to get it operational, plus Arizona can’t force the Navaho nation with Biden in charge right now.

    https://en.wikipedia.org/wiki/Navajo_Generating_Station

  57. 57.

    Urban Suburbanite

    June 22, 2021 at 11:48 pm

    @Roger Moore:

    I doubt it’s that. Xi’s grandiose investments abroad require capital that’s running short in China, and a lot of money is being moved out of the country. Shutting down cryptocurrency means the government can reduce a channel for covertly getting money out.

  58. 58.

    TriassicSands

    June 22, 2021 at 11:58 pm

    @SiubhanDuinne:

    What is probably thinking is, “Why didn’t I think of this?”

  59. 59.

    JoyceH

    June 23, 2021 at 12:00 am

    OMG – the conversation turns to ‘collectibles’ and I’m having PTSD flashbacks about managing my Mom’s estate. Oh well, at least she wasn’t around to learn what those plates were really worth.

    That said, for a while the local CVS had a display of Beanie Baby My Little Ponies, and I couldn’t seem to leave the place without one. But I know better than to think they’re going to fund my retirement. (They’re just so CUTE!)

  60. 60.

    Hkedi [Kang T. Q.]

    June 23, 2021 at 12:19 am

    @JoyceH: As horrible as it its, Bitcoin is trying to expand into collectibles.  They are called NFT’s (Non-Fungible Tokens) it’s just as stupid and grift-y as you would expect.

  61. 61.

    ian

    June 23, 2021 at 1:17 am

    @Enhanced Voting Techniques:

    These ghost cities?

    they may not yield immediate investment, but they are clearly not just built for a quick one off construction boom.  They are long-term development plans, that due to Chinese local-land ordinances and local/ national tax policy, sit empty between designation and occupation.

  62. 62.

    YY_Sima Qian

    June 23, 2021 at 1:26 am

    I have to chuckle at some of the comments here:

    1. China based entities have been big players in bit-coin mining (miners are private companies), but not big players in holding & trading bit-coins. The Chinese persons who are in a position to hold and trade bit-coins are not your average Zhou. It’s not like the average middle class wage slave can purchase bit-coins with Yuans, due to capital account controls.
    2. China’s > US$ 3T foreign exchange reserve have been stable since 2015, and actually jumped in 2020/21, due to increased trade surplus over the course of the pandemic. The emphasis recently has been domestic investment, with noticeable retrenchment in investments to Africa. The reason for the retrenchment is increasing risk profile in Africa leading to potential losses (to which the Paris Club countries say, duh!). This also contradicts the whole “debt trap” narrative that has been popular in western (and even African) MSMs for nearly 2 decades. If the purpose is to ensnare developing countries into debt traps so China can seize strategic fixed assets, why would China worry about loan defaults and retrench investments? Wouldn’t defaults be the goal? Repeated academic studies by actual academic institutions (as in universities, as opposed to think tanks or the press) have shown the “debt trap” narrative to be false. Published loan agreements show that Chinese policy & commercial banks prefer liquid assets as loan collaterals (because they want to be re-paid), guarantee seniority (because they want to be re-paid 1st), but not potentially strategic but ill-liquid fixed assets (because they are not cash). Just about the only example people keep citing as evidence of “debt trap” asset seizure is the Hambantota Port in Sri Lanka, and that deal has been mischaracterized.
    3. People have been predicting popping of a putative real estate bubble in China for nearly 2 decades, without understanding the dynamics in China. Real estate prices are supported at a macro level in China because of a dearth of investment options (& bitcoin is not a viable option for the vast majority), certainly the Chinese stock market has been highly problematic. There are restrictions for investing abroad, unless you are a large financial institution. Therefore, people pile their savings into real estate investments, which over the past 2+ decades have easily achieved returns of 10 – 20X, especially in Tiers 1 & 2 cities. Prices are also supported by physical demand (not just investment demand), due to the world historic urbanization process underway. Furthermore, the apartments that people bought (or were given by their employers) 15 – 20 years ago were often poorly designed & constructed, & too small. The burgeoning middle class are constantly looking to upgrade. Residential buildings built in the 60s – 80s are also being razed to make way for redevelopment. There are definitely local bubbles in some Tiers 4 & 5 cities, but they remain localized. Since the GFC, the Chinese government has been extremely vigilant against excessive residential property speculation (somewhat less so on commercial properties), far more proactive than any other government I am aware of. For example, 30% down payment is required for the 1st property, 50% for the 2nd, 100% for 3rd and on. Many jurisdictions (including Wuhan) forbid each nucleus family from owning more than 2 properties. There was a trend of people filing fake divorces so they can purchase more properties as individuals, now the policy across China is that divorcees can only purchase a new property 3 years after the divorce. In H2 2020, when Wuhan’s real estate market was weak, state owned banks granted properties loan applications more quickly to help support prices, but turned off the spigot after New Year, with signs of sustained economic recovery and overheating in prices in some areas in the city. These are not the actions of a government encouraging the average people to jump into a real estate bubble!
    4. Related to local real estate bubbles are the putative ghost cities, which to me represents a misunderstanding of how real estate development, & development in general, happen in China. Entire sub-districts are planned and constructed at the same time. Blocks after blocks of apartments appear empty, but they have all been sold. However, apartments are mostly sold in China w/ bare concrete walls & floors, zero furbishing. It takes months to furbish an apartment, then people will let it sit for a year or more to air out the VOCs. Then most people will wait until the other support infrastructure is developed – schools, hospitals, shopping malls, etc., before actually moving in. I have lived in 2 different Tier 2 & 1 Tier 3 cities over my decade+ in China, and frequently visited dozens of Tiers 2 & 3 cities. I have seen many developments that appear to sit empty for a couple of years, and then quickly fill up in a couple of years as the general area develop. Governments at different levels can push this process along by moving government offices, universities & state owned enterprises to relocate to these new development zones, essentially forcing people on state salary to move in and build critical mass. Tax incentives also encourage private enterprises to move into these areas. Some developments do fail, or are on pause when the real estate development company runs out of cash, so they look like half finished ghost towns. However, they are not representative of the whole.
  63. 63.

    Bill

    June 23, 2021 at 1:43 am

    @CaseyL: 
    Help me out. Which state is which?

  64. 64.

    Sebastian

    June 23, 2021 at 3:33 am

    @YY_Sima Qian: Very informative, thank you.

  65. 65.

    lowtechcyclist

    June 23, 2021 at 6:01 am

    What’s going on with Bitcoin is just one more symptom of rich people having way more money than can be invested in anything remotely useful.

    We desperately need a wealth tax, if only to end the distortions to our economy caused by so much surplus money sloshing around at the top.

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