The recent Chinese cryptocurrency exchange ban has caused a massive spike in the number of users accessing peer-to-peer (P2P) platforms. The LocalBitcoins P2P platform registered an all-time trading high of $17.5 mln last week, and other local platform volumes have quadrupled as well.
The rush for investors and Bitcoin holders to either buy or sell has driven them into these generally lesser-used platforms. As exchanges like ViaBTC shutter, the Bitcoin that they had previously been holding is being withdrawn into the open market and used via smaller P2P platforms.
Paying a premium
As with other nations where governments are making reckless financial decisions, the Chinese price for Bitcoin is going for a premium against the exchange price. Currently, the price is set at a 20 percent premium vs. the exchange pricing, since the P2P system is allowing consumers to access and use their coin.
Other countries are also facing similar Bitcoin crises, as hyperinflation, massive debt ratios, and poor fiscal policies lead citizens to embrace Bitcoin as an alternative solution. The safety, relative stability and overall positive outlook for Bitcoin has produced sizable premiums on other local exchanges as well.