Chinese New Year brings profit for Chinese Bitcoin Traders
The Chinese New Year, which is celebrated by over one billion people worldwide, is a time of great significance, not just in China, but also in the world of crypto. According to a new report by digital assets financial services platform Matrixport, the Chinese New Year has had an average return of 9% for Bitcoin investors over the past eight years. Markus Thielen, head of research at Matrixport, stated that “buying Bitcoin at the end of the first day of Chinese New Year and selling it 10 trading days later would have returned +9%, on average, with all of the last eight years (2015-2022) showing positive returns.” This means that investors who bought Bitcoin on January 22 and exit the position on February 1 could leave the trade with a 9% profit.
But why is the Chinese New Year such a significant event for Bitcoin? China has been a major player in the crypto market for many years, and the Lunar New Year is a time when many Chinese people return to their hometowns and gather with their families. During these gatherings, people often discuss their investments, and this is where Bitcoin comes in. Thielen believes that “When people get together, they talk,” and this is what drives the Bitcoin market during the Chinese New Year.
China has had a complicated relationship with crypto. While the country has been a major player in the crypto market, the government has also been known to crack down on crypto-related activities. In 2017, the Chinese government banned initial coin offerings (ICOs) and shut down crypto exchanges, causing the value of Bitcoin to drop dramatically. However, the government’s attitude towards crypto has since softened, and in 2019, the country began testing a central bank digital currency (CBDC).
Despite this, it’s worth noting that China is still one of the few countries where owning and trading Bitcoin is not strictly illegal, and it continues to be a major player in the crypto market. In fact, the country is home to some of the largest crypto mining operations in the world, and Chinese investors are known to be very active in the crypto market.
In contrast, the United States’ approach towards crypto has been much more hands-off. The U.S. Securities and Exchange Commission (SEC) has yet to approve a Bitcoin exchange-traded fund (ETF), and the agency has been cracking down on ICOs that it deems to be fraudulent. However, the U.S. government has not taken any steps to outright ban crypto, and many U.S. investors have been able to participate in the crypto market.
Regulation of crypto varies greatly from country to country. Some countries, like China and the United States, have a relatively hands-off approach, while others, like Bangladesh and Nepal, have outright banned crypto. It’s worth noting that the crypto market is still in its early stages, and regulations are likely to change as the market matures.
Despite the possibility of a bull trap that could lure inexperienced traders, the Chinese New Year has been a historically profitable time for Bitcoin investors. As the crypto market continues to mature and regulations continue to evolve, it’s worth keeping an eye on how the Chinese New Year affects the crypto market. Whether you’re a seasoned crypto investor or just getting started, the Chinese New Year is a time to watch the crypto market and potentially capitalize on its movements.
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