Unless you’ve been living under a rock, you’ve heard or read about China’s recent announcements of the cryptocurrency crackdown and the ensuing market crash that infuriated cryptocurrency traders around the world and held their pockets as hundreds of billions of dollars were practically wiped away in value.
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The point, however, is when, not whether you heard or read the news. Well, apparently, it’s important.
It appears that inside information about the raid announcement was circulating on Chinese social media, especially among private trader groups, long before it was announced and reported. There was a false dawn day before another announcement from China about crypto mining hit the market again.
Armed with the market-moving news soon to come, wealthy traders not only managed to sell off their holdings and exit long positions, but they also ran out of cryptocurrencies to await the effects of it when the news broke.
Shorting or going short means that you invest your money in such a way that you profit when the value of the asset goes down, as opposed to the more conventional “long” position where you buy and only make money when the asset price goes up. Short selling is done by seasoned investors and traders when they expect the price to fall in the short term.
This further fuels speculation on social media that this might have been done on purpose as the new announcement was thin (not substantial) in content as there was nothing new as China already had several rounds of restrictions on cryptocurrencies.
The new note merely reiterated the same restrictions originally announced in 2013 and 2017 that prevent financial institutions and government agencies from offering services related to cryptocurrency transactions.
In regulated centralized markets, trading such market-sensitive news would amount to insider trading, which means that nonpublic information is used to benefit from an anticipated change in the price of a security or to avoid losses. It is not in itself illegal to have such information ahead of the market – however, using it for the benefit is illegal.
Technically, in jurisdictions like the United States where cryptocurrencies are considered a commodity, insider trading rules would still apply, although there is no precedent. However, this would require an additional condition that the securities be traded within the United States (e.g. US-listed stocks) even if a trader is from overseas. This would likely not be the case here due to the decentralized nature of cryptocurrencies.
Perhaps the best-known insider in Australian history is Chinese-born Australian investor Rene Rivkin, who was convicted in 2003 on 24 of information related to an impending merger of Qantas and Impulse Airlines.
Trading on the basis of inside information is illegal in the Regulated Markets as it is considered unfair to other investors who do not have access to the information, as the investor could potentially make higher profits from inside information than a typical investor could make .
China has a checkered history when it comes to insider trading, as a 2017 study of one million broker accounts found that wealthy investors need excellent timing to buy and sell unless they trade insider before market moves Messages.
The study concluded that the most successful investors were best at buying shares in Chinese companies just before the official announcements of large dividend payments on stocks that appear to be a direct result of insider trading. The portfolios of these investors were not at all diversified and focused on stocks of local companies.
The crypto market had a wild week of trading as investors and speculators were rocked by a sudden slump in cryptocurrencies, particularly Bitcoin, after a constellation of dark clouds with traders in droves fled amid the current bad mood and outlook.
The world’s largest digital coin crashed to just over $ 30,000 as China doubled its tough crackdown plans to eradicate cryptocurrency activities, including mining and trading.
At press time, Bitcoin (BTC) changed hands at $ 37,500, Ether (ETH) at $ 2,300, Ripple (XRP) at $ 0.92, Binance Coin (BNB) $ 300, Cardano ( ADA) at $ 1.44, Dogecoin (DOGE) for $ 0.34, ChainLink (Link) for $ 23, UniSwap (UNI) for $ 20, Polkadot (DOT) for $ 22 Dollars and Stellar (XML) for $ 0.38.
Risk Warning: Cryptocurrency is an unregulated virtual, notoriously volatile asset with a high level of risk. Any news, opinions, research, data or other information contained on this website is provided for news reporting purposes as general market commentary and does not constitute investment or trading advice.
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