Review after 521: What are the upper and lower limits of the policy? True news and false rumors

Wu said the author | Colin Wu

Editor of this issue | Colin Wu

On the evening of Friday, May 21, the Financial Stability and Development Committee of the State Council (hereinafter referred to as the Financial Committee) held its 51st meeting, calling for a crackdown on Bitcoin mining and trading, and resolutely preventing individual risks from being transmitted to the social field.

Then the panic spread in the Chinese market. The price of Bitcoin fell from the highest of about 41,000 US dollars to the lowest of 31,390 US dollars; the lowest of Ethereum fell to 1,758 US dollars, and various altcoins were almost cut in half. OKB and HT, the two major platform tokens, led the decline by more than 50%.

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1 Policy upper and lower bounds

Previously, Wu said that the blockchain has been analyzed, and pointed out that the level of the order is higher than before, but also pointed out some difficulties in the implementation of policies, such as the prohibition of Bitcoin and mining, and the main body of the exchange has moved out. It is difficult to have long-arm jurisdiction overseas. So far, apart from this statement from the meeting, no actual policy information has been released, including the front-page article in the Economic Information Daily.

The upper limit of the current policy: it may be a joint order from multiple ministries and energy-related central enterprises (similar to 94) to prohibit all cryptocurrency mining. As for only prohibiting Bitcoin mining, other cryptocurrencies such as Ethereum, FIL, and CHIA are not prohibited. Basically, there is no need to have illusions. One sentence at the meeting cannot include too much. If the subsequent detailed rules are implemented, other types of mining will definitely be included. In the field of transactions, all banks and other institutions are prohibited from providing services and all promotional activities, and cooperate with strong law enforcement agencies to crack down. This has been relatively clearly stated in the documents issued by the three associations under the central bank, but there is a lack of implementation of joint strikes by multiple ministries and commissions.

The lower limit of the policy is through the lobbying of the local government. Beijing realizes that compliant mining does not affect financial stability, and at the same time helps to eliminate abandoned water and electricity. Therefore, the boundary of the policy is limited to combating illegal and illegal mining. Regular mining activities, and market-oriented behaviors to limit energy-intensive mining electricity consumption. The trading field will continue to use the current practice, and local law enforcement agencies may step up crackdowns on currency-related businesses, especially the crime of "helping trust" will become more frequent.

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2 What is "real news"

Just like the phrase "resolutely prevent the transfer of individual risks to the social field", public opinion attacks are Beijing's routine operations to reduce the investment of retail investors and off-market investors in the field of cryptocurrencies. However, not all of them have policy guiding significance, and everyone's discrimination of the meaning and importance of information should be strengthened.

First of all, the information released by official organizations has absolute policy guiding significance. For example, the 521 information this time. Or the person in charge of the relevant government department made a speech, accepted an interview with the media and interpreted it. The second is information released by associations. For example, the three associations under the central bank issue documents. Their releases are generally instructed by government departments, but they are not so important that government departments need to come forward, so the associations issue documents. Thirdly, it is an important column of various central media, such as CCTV news broadcast, People's Daily editorial, and Xinhua News Agency report.

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3 short collective manipulation?

On May 23, several small news appeared in the market, which caused violent turmoil, including the official mall of Huobi Mining Pool to stop accepting mainland customers, and OKEx to stop C2C trading of OKB. The source of real information is very small things, but under the exaggeration, it became "China will ban all OTC transactions". Some investors panicked and worried that they would not be able to withdraw funds, so they sold coins and caused the market to plummet, and Ethereum fell to the nearest lowest point.

There are remarks in the market about joint short-seller manipulation of exchanges, which we believe is not credible. In particular, China’s exchanges are under the control of the government, so it is impossible to be willing to take the risk of manipulating the market; secondly, due to the previous bull market, the income of exchanges has been too high, and it is impossible to rely on market manipulation to make profits.

More likely, since the encryption industry advocates distributed office and free flatness, the control of internal information release is very problematic. Most departments and bosses understand that it should be as low-key as possible at this time, but some departments, especially the customer service system, do not have such sensitivity. This is also the reason why Matcha, OKEx, and Huobi are the first to disclose information and cause panic.

Since the exchange has a short-selling mechanism, rumors in the encryption industry cannot be caught, so the cost of breaking the law is almost zero. Therefore, there are short-sellers who spread rumors, exaggerate or even fabricate news, which is almost 100% certain. Driven by interests, the short-selling party is full of motivation to spread rumors frantically, but in the face of big emotions, the speed and intensity of dispelling rumors cannot keep up with rumors. The cryptocurrency market has a special environment, which is extremely volatile, full of rumors, information confusion, and no supervision. However, Chaos is a Ladder, putting rumors and emotions in the evaluation and thinking matrix is ​​also what smart investors need to measure rather than complain.

Statement of interest: The author of this article does not operate short-term, and holds a small amount of mainstream cryptocurrencies for a long time.