Category Archives: 8BTC

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Leveraged Trading Blamed for Chinese Trader Suicide

Bitcoin Pierces, Remains Above ,000 Barrier as Rally Underway (1)

A Bitcoin trader in China has allegedly taken his own life following a disastrous trading loss on a highly leveraged trading position, as reported by Chinese blockchain outlet 8btc.

The man, named as Hui Yi, apparently lost BTC 2,000 (approximately USD 16.2 million at time of writing) of investor funds when he took up a short position at 100x leverage. When the market took a swing in the opposite direction, his position was immediately liquidated.

Hui, who was said to be the CEO and co-founder of BTE.TOP, a crypto market analysis portal, passed away on 5 June 2019. His death was only revealed by an ex-partner when rumors arose that the missing funds had been embezzled from clients, although it is widely speculated that the incident could also be a staged death to avoid repercussions.

The staggering loss would only have meant 20 Bitcoins without any margin trading — still a significant sum valued at USD 182,000, but nowhere close to the astronomical sum made possible by the 100x leverage.

Leveraged trading in Bitcoin is a means to amplify profits with a small capital, and was popularized by the BitMEX platform, which allows up to 100x leverage. It can multiply profits, but traders often underestimate how quickly positions can liquidate if the market moves in an undesirable direction, particularly with high leverage.

In the case of 100x, Bitcoin need only move 1% in the direction opposite of the trade for the position to liquidate — and Bitcoin has certainly done that and more every day for the past many years.

More and more exchanges and trading platforms are now offering leveraged or margin trading. Binance itself is in the midst of margin trading trials, as is Coinbase.

 

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China Firm Mines Bitcoin Secretly, End up Losing $23 Million

China Firm Mines Bitcoin Secretly, End up Losing  Million

A Chinese company has sold off its subsidiary at only 10% of the original valuation after suffering losses from suspected secret cryptocurrency mining activities amounting to some USD 23 million.

Huatie HengAn, the subsidiary of listed Chinese company Huatie, was reported by local media outlet 8BTC as having been sold for USD 2 million. Just one year ago, it had been valued at USD 25 million.

Originally a construction company, in 2018, Huatie HengAn allegedly bought about 36,500 pieces of hardware equipment it listed as “servers” from hardware manufacturers Canaan and Ebang. These are both specialized Bitcoin mining hardware producers, so it was suspected that the pieces of equipment were bought solely for the purpose of mining crypto instead of construction.

Huatie’s end of year report released last December showed losses of about USD 14 million for its subsidiary firm. By February 2018, this net loss had risen to a total amount of USD 23 million.

The company can take comfort from the fact that they weren’t the only ones who suffered in the mining business. Although the first half of 2018 already saw prices of crypto falling, it wasn’t until the latter half of the year that difficulties emerged for Bitcoin miners.

Hashflare was the first big casualty, closing down its popular cloud mining services. And then when Bitmain – along with its failed support for Bitcoin Cash – posted massive losses, hash power began to drop for the first time in years.

 

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China Could Become a Factor in Bitcoin’s Success in 2019, but Knowledge Is Key

The latest survey released in China illustrates just how much cryptocurrencies such as Bitcoin are gaining interest there, despite the country’s prohibitive stance on digital currency.

Given China’s huge impact on cryptocurrency mining despite Bitmain’s recent staff layoff announcements, to some this may come as no surprise. However, the Chinese government has attacked Bitcoin at every opportunity whilst casting its net around numerous blockchain opportunities, favoring the tech behind Bitcoin above adopting the currency.

Suggestions that Bitmain layoffs may be a possibility early this year first appeared on Maimai — China’s version of LinkedIn — before Christmas, where one verified Bitmain employee wrote, “It’s affirmative. The layoff will start next week and involves more than 50 percent of the entire Bitmain’s headcount.” The Beijing-based company now mines more than half the world’s bitcoins, according to some reports.

The survey conducted by blockchain PANews cited 40% of their 4,200 respondents as willing to take up Bitcoin or other cryptocurrencies in the future and at least were familiar with popular terms related to cryptocurrency. Despite the government’s blockchain push, only 22% of respondents said they were aware that tokens are powered by blockchain, clearly not making the connection between cryptocurrency and its driving force.

The 8BTC article which covered the PANews survey suggests that Bitcoin is not necessarily the way forward; unsurprising given the Chinese governments’ stance on cryptocurrencies.

“As everyone knows, Nakamoto has defined it as a peer-to-peer electronic cash payment system in the Bitcoin white paper. “Payment” is regarded as the original intention of cryptocurrency, but in China where mobile payment is very convenient, up to 63.43% of the choices ignore encryption. Money as a means of payment suggests that the road to promoting cryptocurrency in China may not work.”

Although cryptocurrencies were little understood by a majority of those surveyed it is clear that those who claimed to have a good understanding of blockchain were from the millennials group, with the majority being born after 1995.

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