China seems intent on crushing crypto, but crypto doesn’t seem to mind. As the Chinese government
banned all digital currency transactions last Friday, crypto prices rose and decentralized
exchanges cackled with delight, trading volume erupting, with dYdX happiest of all.
Stick around as we take a defi dive on this edition of Exodus Crypto News
Last week, the Chinese government banned all digital currency transactions. The People’s Bank
of China issued a stern statement that, in China, cryptocurrencies are “not legal and should not
and cannot be used as currency in the market.” Harsher penalties and tighter surveillance on
crypto mining and trading will be implemented. At the moment, possession of a cryptocurrency is
the only legal crypto activity in the world’s most populous country. You can HODL but you
can’t anything else. Even providing information on cryptocurrency is now considered a crime.
According to Cointelegraph, this is the 19th time China has either banned crypto or caused
massive FUD since 2009. This 19th crypto crackdown led to brief investor panic,
with $450 million in liquidations within minutes. Chinese traders had to look for other options.
The answer was to aim for anonymity and permission-free trading and head
for DEXs. Among decentralised exchanges, dYdX has been their new venue of choice.
The Chinese government was aware that its ban would lead traders to look abroad.
They emphasized services provided to Chinese citizens from overseas crypto exchanges are
also illegal. But here’s the thing: they can’t punish anyone unless they catch them.
Decentralized exchanges don’t require their customers to submit
any identifying information which means users can remain anonymous.
While China continues to muscle out crypto,
crypto doesn’t seem too bothered. After the initial market hit, Bitcoin has since risen
7% and Ethereum 15%. This suggests investors are not nervous, but rather they are seeing
these swings as an opportunity to snag some sweet crypto at a discount.
Many DEXs are seeing their numbers blossom. Uniswap showed a $1.2
billion increase in exchange activity, with the price of the native token,
UNI, rising 30% to reach $26. The most joyous of the bunch is dYdX.
The reason for Chinese traders switching to DEXs is how they facilitate privacy and
anonymity—important if your government doesn’t want you dealing in crypto.
Exchange juggernauts Huobi Global, which is based in China, has announced that they will
be suspending new accounts from China and will “gradually retire” existing accounts
by the end of the year. Binance will likewise no longer accept accounts in China. Colin Wu,
a Chinese blockchain journalist predicted that Chinese local communities
will “flood” the decentralized finance world. So DEX is what’s next.
A tweet from Antonio Juliano, the founder of the decentralized derivatives exchange, dYdX,
confirmed the surge in registrations and volume
and led to a running of the bulls on the exchange’s native token, DYDX.
Juliano tweeted “5 years ago I left Coinbase and eventually founded dYdX.
Today, for the first time, dYdX Protocol is doing more trade volume than Coinbase.”
As news spread that dYdX is now handling trading volumes comparable to the world’s largest crypto
exchanges, DYDX shot up 90% over a three-day span, suddenly the best-performing cryptocurrency
among the top 100 coins. This isn’t an overnight success, either. DYDX has been going from strength
to strength, arching skyward by more than 80% since it first hit the market, on September 8 of
2021. This result is more than twice Coinbase’s volume during the same period, second only to
Binance’s mighty $23 billion. dYdX just keeps cookin’, having clocked 19,700% growth over
the last six months. To put that into context, Coinbase shows growth of around 6% during the same
period, but that is largely because Coinbase was already a Goliath, while dYdX is a quickly-growing
David. But don’t think that Coinbase is bothered. In September 2019, they invested 1 million USDC
in dYdX in what it called a “USDC Bootstrap Fund.” That bootstrap will have paid off handsomely.
The moral of this story? The more that centralized forces push against crypto,
the more traders will move to decentralized exchanges. This is what crypto was built for:
to give power back to the individual investor.
Thanks for watching everyone,
make sure to hit those Like and subscribe buttons, and until next time hodl on!