Post 521 replay: what is the upper and lower limits of policy? Real News and Disinformation Shorting

Since the exchanges have a shorting mechanism and disinformation in the crypto industry cannot be caught, the cost of breaking the law is almost zero, so it is almost 100% certain that shorters have been engaging in disinformation, exaggerating and even fabricating news.

Post 521 replay: what is the upper and lower limits of policy? Real News and Disinformation Shorting

On the evening of Friday, May 21, the Financial Stability Development Committee of the State Council (hereinafter referred to as the FSC) held its 51st meeting, calling for a crackdown on bitcoin mining and trading practices and resolutely preventing the transmission of individual risks to the social sector.

The Chinese market panic then spread, with bitcoin prices falling from a high of around $41,000 to a low of $31,390; ethereum fell to a low of $1,758, and all types of cottage coins were nearly decimated. okb and HT, the two major platform pass-throughs, led the way with declines of over 50%.

The core reason for the continuous shock and decline is that the next step of the policy is still unclear, and in this context, the shorting group continues to spread and amplify rumors, causing market panic.

1 The upper and lower limits of the policy

Previously Wu said blockchain has conducted an analysis, pointing out that the level of this order is higher than ever before, but also pointed out some difficulties in the implementation of the policy, such as the ban on bitcoin and mining can not be followed, the exchange body has moved out of overseas difficult to long-arm jurisdiction. So far, no actual policy information has actually been released, including a front-page article in the Economic Reference News, except for this one sentence from the meeting.

The upper limit of the current policy: it could be a joint order (similar to 94) from multiple ministries and energy-based central enterprises to ban all cryptocurrency mining. As for banning only bitcoin mining and not other cryptocurrencies such as ethereum, FIL, CHIA, you can basically have no illusions. One sentence of the meeting cannot include too much, and if the subsequent rules fall into place, it will definitely include other categories of mining. The trading field then prohibits all banks and other institutions from providing services and all promotions, and cooperates with strong law enforcement departments to crack down. This has been made relatively clear in the three associations issued by the central bank, only the lack of implementation of the joint landing crackdown by multiple ministries.

The lower limit of the policy, on the other hand, is that through lobbying by local governments, Beijing recognizes that compliant mining is less likely to affect financial stability, while helping to dissipate abandoned water and electricity, and therefore limits the boundaries of the policy to cracking down on illegal and non-compliant mining activities, as well as using market-based actions to limit the use of electricity for high energy-consuming mining. The trading sector will follow the current practice, with local law enforcement agencies likely to step up their crackdown on coin-related businesses, especially the crime of “helping the letter” will be more frequent.

We don’t know if the final policy will be at the upper or lower limit. Historically, there has been a cap on P2P and a net on some Internet businesses. We are cautiously optimistic about this as it is still in the midst of great uncertainty.

2 What is “real news”

As the phrase “resolutely prevent the transmission of individual risks to the social sector” suggests, the public opinion crackdown is a routine move by Beijing to reduce the number of retail and over-the-counter investors entering the cryptocurrency space. However, not all of them necessarily carry policy guidance, and we should strengthen our understanding of the meaning and importance of information.

First of all, information released by official institutions has absolute policy guidance. For example, the information of 521. Or the person in charge of the relevant government departments to speak, accept media interviews to explain. Secondly, information released by associations, such as the three associations under the central bank, whose release is generally authorized by government departments, but not to the extent of the importance of the need for government departments to appear, and so issued by the association. Again, it is the important columns of various central-level media, such as CCTV news broadcast, the People’s Daily editorial, Xinhua News Agency’s electricity head reports.

Finally, a large number of official media sub-paper sub-publication sub-network, all kinds of financial media, etc., does not have a policy guidance, especially now the Internet era to pursue traffic, headline party is inevitable. Just their collective reports may also indirectly influence the policy of decision makers.

3 Short collective manipulation?

On May 23rd there were several small news items in the market that triggered dramatic turmoil, including the official Firecoin mining pool mall stopping accepting mainland customers and OKEx preparing to stop C2C trading of OKB. The real information was very small in origin, but it turned out to be “China will ban all OTC trading” under the spin. Some investors panicked and worried about not being able to withdraw their money, so they sold their coins and caused the market to plummet, with Ether falling to its recent lows.

There is talk in the market that exchanges are manipulating with short-sellers, which we think is not credible. Chinese exchanges in particular are under government control and are unlikely to be willing to risk manipulating the market; secondly, due to the previous bull market, exchanges’ revenues have been so high that they are unlikely to need to rely on market manipulation to make profits.

More likely, because the crypto industry advocates distributed offices and free and flat, the control of internal information release is very problematic. Most departments and bosses understand that they should keep as low a profile as possible at this time, but some departments, especially the customer service system, do not have such sensitivity. This is the reason why Matcha, OKEx, and Firecoin all had customer service poke out information first and cause panic.

Since exchanges have a shorting mechanism and disinformation in the crypto industry cannot be caught, the cost of breaking the law is almost zero, so it is almost 100% certain that shorters have been making disinformation, exaggerating or even fabricating news. The shorting party has full motivation to spread rumors like crazy in front of the interest drive, and the speed and strength of disinformation cannot catch up with rumor-making in front of the big emotions. The cryptocurrency market is a unique environment, extremely volatile, full of rumors, confusing information, and no regulation. But Chaos is a Ladder, and putting rumor and sentiment in the matrix of evaluation and thought is also something smart investors need to weigh rather than complain about.

Declaration of Interest: The author of this article does not operate in the short term and holds a small amount of mainstream cryptocurrencies for the long term.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-05-24 00:33
Next 2021-05-24 01:08

Related articles