Bitcoin has once again taken center stage with a dramatic surge and plunge, echoing the wild swings seen in stock markets. Over the past month, the digital asset has experienced extreme volatility, drawing comparisons to A-shares’ turbulent movements. From May 27 to June 17, Bitcoin climbed from ¥2,950 to ¥5,179.99 per coin—the highest level since February 2014. But the rally didn’t last. By June 22, prices had dropped to ¥4,591, and on June 23, they plunged further to ¥3,606.01. At the time of writing, Huobi reported Bitcoin trading at ¥3,866 per unit.
This rollercoaster ride isn’t just driven by market sentiment—it’s amplified by leverage, short-term speculation, and around-the-clock trading mechanics that allow investors to magnify both gains and losses.
The Rise of Short-Term Traders in China’s Bitcoin Market
The backbone of recent Bitcoin activity lies in China’s vibrant yet volatile trading ecosystem. Industry insiders estimate that over 90% of global Bitcoin transactions occur via Chinese platforms, where zero-fee trading policies enable frequent buying and selling. According to Xu Xingming, CEO of OKCoin, domestic real trading volume accounts for approximately 30–40% of global activity.
What’s more striking is the dominance of short-term traders. Huobi co-founder Du Jun revealed that after analyzing user behavior during the recent price surge, only 13% of active traders intended to hold long-term. Nearly 90% were engaging in quick trades to capture short-term price differences.
Take Liu Fang (a pseudonym), a 26-year-old designer from Heilongjiang. She began investing in Bitcoin in mid-2014 with an average cost basis around ¥2,500. While her early returns were modest—earning about ¥20,000 over two years—her recent experience was far more dramatic.
“I sold ¥30,000 worth this morning,” she said on June 23. “I still have ¥60,000 worth left. When Bitcoin hit over ¥5,000, I held on. Now it’s down to ¥3,000s. If it climbs back above ¥5,000, I’ll sell most of it—but keep some. I believe it could reach ¥8,000.”
Her story reflects a broader trend: fast-moving traders leveraging market momentum rather than long-term conviction.
Another trader, Pan Shi (also a pseudonym), a seasoned internet professional, turned ¥100,000 into a ¥70,000 profit within weeks. He bought at ¥3,000s, sold part at ¥4,000s, re-entered the market, and cashed out entirely at over ¥5,000.
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However, for every success story, there are countless tales of loss. As one investor lamented: “So many people are losing money now. No one wants to buy anymore—those holding coins are sitting on heavy losses.”
Leveraged Trading: Fueling the Boom and Bust Cycle
One key driver behind Bitcoin’s extreme volatility is the widespread availability of leverage on major exchanges.
Most platforms offer 4x to 5x leverage, enabling users to borrow funds or coins to amplify their positions. This means a trader with ¥10,000 can control a ¥40,000 or even ¥50,000 position—dramatically increasing both potential returns and risks.
Leverage works both ways:
- In rising markets: Users borrow CNY to buy Bitcoin and sell at higher prices.
- In falling markets: They borrow Bitcoin, sell it immediately, and buy back later at lower prices to return the coins—profiting from the decline.
This T+0, 24/7 trading model with no daily price limits creates perfect conditions for rapid price swings.
For example:
- OKCoin offers up to 5x leverage with no fees.
- Huobi provides up to 4x leverage, charging a 0.1% daily fee on leveraged positions.
Such tools attract speculative traders but also expose them to catastrophic losses if the market moves against them—even slightly.
Why Is Bitcoin So Volatile?
Bitcoin’s price swings aren’t random—they stem from structural and psychological factors.
1. No Intrinsic Price Controls
Unlike traditional financial markets with circuit breakers or daily limits, Bitcoin trades globally without pauses or restrictions. Prices react instantly to news, sentiment, or large trades.
2. Supply Scarcity & Halving Events
A major catalyst for the recent rally was the anticipation of the Bitcoin halving, scheduled for July 2025. Every four years, Bitcoin’s block reward is cut in half—a built-in scarcity mechanism designed by its creator. Historically, halvings have preceded bull runs due to reduced new supply entering the market.
3. External Shocks & Regulatory Risks
Bitcoin is highly sensitive to regulatory announcements. In late 2013, after five Chinese government agencies issued a warning about Bitcoin risks, prices collapsed from ¥8,000 to as low as ¥900.
Similar risks persist today:
- Exchange hacks
- Regulatory crackdowns
- Fraudulent schemes disguised as investment opportunities
As analyst Lin Jiapeng warns: “There’s always a risk of sharp declines. We’ve seen exchanges shut down or founders disappear overnight—like GBL in 2013.”
The Dark Side: Misinformation and “Pyramid-Like” Promotion
While legitimate platforms operate under strict protocols, many newcomers are lured in by misleading or aggressive marketing tactics.
Chengdu-based internet worker Hu Ming (pseudonym) shared his experience: “I was added to a 500-member Bitcoin group by a stranger. Within a day and a half, I left—it felt like a pyramid scheme.”
The group used professional-looking videos—including clips from TV news—and claims of international adoption to promote Bitcoin as a get-rich-quick opportunity. Admins pushed trading platforms and promised massive returns.
These tactics prey on inexperienced investors who lack understanding of blockchain technology or market dynamics.
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FAQ: Understanding Bitcoin’s High-Stakes Game
Q: What causes Bitcoin’s extreme price swings?
A: A mix of speculative trading, leverage use, 24/7 global markets without price limits, and sensitivity to news or macro events like halvings.
Q: Is leveraged Bitcoin trading safe for beginners?
A: No. With 4x–5x leverage, even small price drops can trigger liquidation. It's recommended only for experienced traders with strict risk management.
Q: How much of Bitcoin trading happens in China?
A: While exact figures vary, Chinese platforms historically handle over 90% of spot trading volume globally, thanks to zero-fee models and high retail participation.
Q: Can I profit from falling Bitcoin prices?
A: Yes—through margin trading or borrowing coins to sell short. However, this requires advanced knowledge and carries high risk.
Q: Are there safeguards against exchange fraud?
A: Choose well-established platforms with transparent operations. Avoid unknown groups or private investment schemes promising guaranteed returns.
Q: When is the next Bitcoin halving?
A: Expected in July 2025. This event reduces new supply by half and often precedes bullish market phases.
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Final Thoughts: Ride Smart or Stay Out
Bitcoin isn’t just digital money—it’s a psychological battleground where fear and greed dictate outcomes. As Xu Xingming puts it: “You only have two directions—up or down—and each has a 50% chance.”
For ordinary investors, the lesson is clear: only allocate what you can afford to lose, avoid emotional decisions, and never chase hype.
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