Binance has given crypto traders in China a new reason to smile. But traders in other parts of the world might soon benefit in a big way too—even if indirectly.
Yesterday, the world’s largest cryptocurrency exchange by volume announced the launch of a new peer-to-peer trading platform for Chinese users.
It’s a pretty big deal, given that crypto trading through centralized (third-party) exchanges is currently forbidden in China. It appears, however, that holding and trading cryptocurrencies on a peer-to-peer basis is perfectly fine.
And while it’s difficult to measure the volume of the over-the-counter (OTC) market, most analysts agree that it’s at least as vital to the crypto ecosystem as the trading that happens on exchanges—and perhaps even much bigger.
Opening up a safe space for Chinese traders to engage in the market could potentially be a big boost for Bitcoin and other cryptocurrencies. Binance’s move opens a new door for more than 1.4 billion people in China to find their way into the world of crypto. Already, on p2p Bitcoin marketplaces such as Localbitcoins and Paxful alone, Chinese traders have moved more than 30,000 BTC so far this year.
It’s enough to place China in the top five nations in the world in terms of p2p crypto trading, according to data from Anacoinda. In dollar amounts, this would mean Chinese Bitcoin traders moved more than $258 million in 2019.
Making it even easier to exchange Bitcoin and other cryptocurrencies directly among traders could drive those numbers far higher. And that, in turn, means a healthier market in the long term.
An injection of liquidity into crypto would mean a more stable market—one that is less susceptible to manipulation. It’s worth noting that many traders with access to the Chinese market can also play in other, more traditional markets. But for many of the more than 1.4 billion Chinese residents, the only short-term solution to buy and trade cryptocurrencies is the use of p2p platforms and OTC trading desks, such as the being offered now by Binance.
Many traders shared their optimism through social media upon the news. Kenneth Cheung, managing director at Joyrich Securities Investment Ltd, called it “huge” for the industry, adding that Chinese market holds lots of potential: “1.4 [billion] people can now trade cryptos easily, and it's expanding to other regions soon and driving fast adoption. Another impressive and amazing milestone from the Binance team.”
Binance brings with it the strength and resources that come with being arguably the most important company in the entire cryptocurrency industry. You’d be hard pressed to find another company with the same ability to bring China further into the crypto fold.
Binance CEO Changpeng Zhao (“CZ”) said yesterday on Twitter that transaction volumes on day one had already “exceeded” the company’s expectations, and once again reiterated that China is but the first of many countries on his yet undisclosed list of new markets to explore.
CZ and Binance evidently understand that while hodling is useful to maintain and even increase the price of Bitcoin and other assets, it’s far better to create new markets for Bitcoin if you are trying to increase its value.