It’s not easy being a fan of Chinese cryptocurrency. Buying and selling the fashionable digital assets has been severely restricted in the country since the country banned trading platforms in 2013. Mining, the energy-hungry process that produces most crypto “tokens,” was raided out of China in 2021. And now, prices are crashing in a global cryptocurrency crash that has vaporized over $1 trillion in paper wealth.
Chinese crypto fans who have survived the bans are not shaken by a trillion-dollar financial disaster, several told Sixth Tone. But in the short term, it can be an expensive belief.
Despite the crackdown, China is believed to have a sizable community of crypto investors. According to web analytics firm SimilarWeb, China was the source of around 10% of traffic for major crypto derivatives trading platforms OKX and Deribit, although it didn’t crack the top 3 for major exchanges Binance and Coinbase in the same study.
The Chinese public is certainly interested in crypto. The crash made headlines and topped social media threads. State media have used it to justify the government’s no-crypto policy, saying it proves that cryptocurrencies are “nothing more than a set of digital codes” and that the regulations have protected Chinese investors from losses. In the meantime, individual investors have complained about losses in public and private forums.
The collapse of Terra and Luna coins, which promised risk-free, high-yield savings accounts, was the spark for the crash. “Many people bought in with high leverage after seeing an 80% drop. A few days later, they landed deep in the swamp,” said Huang Zijian, a part-time cryptocurrency investor based in Shenzhen. He got away with a few well-timed sales, but a friend lost around 400,000 yuan ($59,840) in two days. Huang gave a pseudonym, citing the sensitivity of the matter.
“We were very surprised. I’ve never seen large institutional players fall so hard in the past,” Huang said.
On investor forums, boasts of profits have given way to self-deprecating jokes about the need to “lie down,” a Chinese catchphrase for surrendering to fate, said Cai Zhuoheng, a cryptocurrency enthusiast who asked to use a pseudonym for the sensitivity of to use The reason. The 23-year-old, who first tried crypto in June 2021, caught his losses early and avoided the big crash. A few months ago, he lost 30,000 yuan and sold all his digital assets.
“I could not have survived this crash even if I had made a profit beforehand,” Cai said. “The meltdown actually made me feel better; I realized that no one can stay afloat in such a downward spiral.”
But despite official warnings and the crash, many investors are unimpressed. Despite short-term pessimism, Cai said many have continued to hold the coins, waiting for a recovery.
Mining investors, many of whom remain in the field after moving their operations overseas, are particularly optimistic, Cai said.
“Those who freak out about the loss are usually short-term traders, but if you look at miners or people making mining-related investments, they’re much calmer and won’t get out of the business until it’s completely unprofitable,” he said said.
Huang also plans to stay in the market, he said. He has only used free earnings from side jobs so he can avoid some risks.
“Like the internet, bitcoin has grown with ridicule, doubt and rejection over the past few decades, but overall the price is rising and gaining more and more recognition around the world,” Huang said.
Li Xueying, an online video producer, said she is considering entering the market while it is down. She became interested after meeting a group of experienced crypto investors at a new job.
“When you’re surrounded by veterans who can provide you with credible market intelligence, it gives you the confidence to keep going despite the risk.” The 24-year-old requested that a pseudonym be used due to the sensitivity of the matter.
Cai also said he would buy back after reflecting on his previous investments, but felt the market lost its early idealism as new money poured in.
“For us, the new hires, we just saw it as a money-making game. As with any other financial activity, once you place your bet, you accept the risks and rewards.”
Publisher: David Cohen.
(Header image: A digital screen displays cryptocurrency prices in US dollars in Hong Kong, March 25, 2022. Paul Yeung/Bloomberg via Getty Image/VCG)