Bit­coin sinks as China said to or­der ex­change halt this month

The Star Malaysia - StarBiz - - Treasury Pulse - – K.M. Lee

BEI­JING: Bit­coin tum­bled, head­ing for its worst week since Jan­uary 2015, af­ter peo­ple fa­mil­iar with the mat­ter said China aims to stop ex­change trad­ing of crypto-cur­ren­cies by the end of Septem­ber.

Re­gional Chi­nese reg­u­la­tors were no­ti­fied of the plan by a cen­tral bank-led group over­see­ing In­ter­net fi­nance risks, said the peo­ple, who asked not to be named be­cause the in­for­ma­tion is pri­vate. Bit­coin dropped 9.3% to US$3,077.55 at 9.22am in Lon­don, ex­tend­ing this week’s de­cline to 28%.

The no­tice sug­gests Chi­nese pol­icy mak­ers will move quickly with their most far-reach­ing mea­sure to rein in the growth of cryp­tocur­ren­cies. China’s crack­down, which in­cludes a ban on ini­tial coin of­fer­ings an­nounced last week, fu­elled an abrupt re­ver­sal in bit­coin af­ter it soared more than 700% in the 12 months through Au­gust.

The dig­i­tal cur­rency tum­bled on Thurs­day af­ter BTC China, one of the coun­try’s largest cryp­tocur­rency venues, said it would stop han­dling trades by month-end. Ri­vals OKCoin and Huobi said they haven’t re­ceived any reg­u­la­tory or­ders to halt.

The Peo­ple’s Bank of China didn’t im­me­di­ately reply to a faxed re­quest for comment.

The cryp­tocur­rency ban will only ap­ply to trad­ing on ex­changes, peo­ple fa­mil­iar with the mat­ter told Bloomberg on Mon­day. Au­thor­i­ties don’t have plans to stop over-the-counter trans­ac­tions, the peo­ple said.

While Bei­jing’s mo­ti­va­tion for the ex­change ban is un­clear, it comes amid a broad clam­p­down on fi­nan­cial risk in the run-up to a Com­mu­nist Party lead­er­ship reshuf­fle next month.

Bit­coin’s surge over the past few years has fu­elled con­cerns of a bub­ble and prompted warn­ings of a po­ten­tial crash from scep­tics in­clud­ing JPMor­gan Chase & Co’s Jamie Di­mon and bil­lion­aire in­vestor Howard Marks.

China ac­counts for about 23% of bit­coin trades and is also home to many of the world’s big­gest bit­coin min­ers, who use vast amounts of com­put­ing power to con­firm trans­ac­tions in the dig­i­tal cur­rency.

Some mar­ket ob­servers have spec­u­lated that Chi­nese reg­u­la­tors will al­low cryp­tocur­rency ex­changes to re-open once the gov­ern­ment has mea­sures in place to pro­vide greater over­sight.

Matt Roszak, the chair­man of Wash­ing­ton-based Cham­ber of Dig­i­tal Com­merce and an in­vestor in BTC China, said he an­tic­i­pates that the ex­change will re­sume op­er­a­tions by year-end.

“That is the ex­pec­ta­tion based on months of dis­cus­sions – the tim­ing of which may be im­pacted a bit with the ICO phe­nom­e­non,” Roszak said in an email.

“China is pre­par­ing to pro­vide li­cen­sure for less than a hand­ful of ex­changes as it grap­ples with the me­te­oric in­crease in cryp­tocur­rency trad­ing, and spec­u­la­tion on ICOs – li­cen­sure and en­gage­ment with gov­ern­ment will help pro­pel this in­dus­try for­ward.”

Pre­dic­tions for an even­tual re­sump­tion haven’t done much to com­fort bit­coin traders.

The cryp­tocur­rency swung to a loss af­ter Bloomberg re­ported the gov­ern­ment no­tice and is now trad­ing at the weak­est level in six weeks. — Bloomberg

AX­I­ATA Group Bhd (code: 6888) es­tab­lished a new all-time high of RM7.40 on May 6, 2013 fol­low­ing a mas­sive rally.

There­after, this stock was gen­er­ally in range-bound con­sol­i­da­tion mode, last­ing nearly two years.

Dur­ing the process, the bulls made three no­table at­tempts to move into un­known ter­ri­tory, once in Novem­ber 2014 and twice in Fe­bru­ary 2015, but with­out suc­cess.

Ax­i­ata then slipped into cor­rec­tion mode and has stayed that way amid per­sis­tent profit-tak­ing ac­tiv­ity, which saw prices skid­ding to as low as RM4.11 in late Novem­ber last year, the worst level in six years.

Soon, re­newed bar­gain hunt­ing in­ter­est emerged, help­ing to lift Ax­i­ata shares off the ebb. This counter fin­ished flat at RM5.09 yes­ter­day.

Based on the daily chart, Ax­i­ata has re­cov­ered back to the three-year-old de­scend­ing trend­line and the trend ahead is pretty straight­for­ward.

A breach of the im­me­di­ate re­sis­tance of RM5.20 ac­com­pa­nied by big­ger trad­ing vol­umes will sig­nal the end of the cor­rec­tion phase. An­other pos­i­tive break­out of the next up­per hur­dle of RM5.40 will fur­ther raise in­vestors’ op­ti­mism that Ax­i­ata is in­deed on a new leg of up­trend.

Oth­er­wise, this stock may drift side­ways at best, if not re­treat­ing on an­other round of cor­rec­tion. Else­where, the os­cil­la­tor per cent K and the os­cil­la­tor per cent D of the daily slow-sto­chas­tic mo­men­tum in­dex were on the slide. It had trig­gered a short-term sell near the over­bought area on Sept 13.

Also on the de­cline, the 14-day rel­a­tive strength de­te­ri­o­rated from a read­ing of 78 on Sept 12 to end at the 61 points level yes­ter­day.

Mean­while, the daily mov­ing av­er­age con­ver­gence/di­ver­gence his­togram was still above the daily sig­nal line to keep the buy call, but is weak­en­ing.

Tech­ni­cally, in­di­ca­tors sug­gest a bullish break­out re­mains elu­sive, but we are not dis­count­ing that, if the un­der­ly­ing tone of the prin­ci­pal mar­ket turns bet­ter, as Ax­i­ata has been gen­er­at­ing some in­ter­est lately.

To the down­side, ini­tial sup­port is pegged at the RM5 mark, fol­lowed-closely by the RM4.90 line. A crack of the lower floor of RM4.78 may drag prices down to the RM4.54RM4.55 band.

The com­ments above do not rep­re­sent a rec­om­men­da­tion to buy or sell.

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