One chart shows how the Chinese bitcoin market collapsed in 2017

  • Trades paired with Chinese yuan declined from around 90% of bitcoin market in December 2016 to 0% in November 2017 amid a government crackdown.

  • Meanwhile, US dollar, Japanese yen, and euro volumes have grown, Morgan Stanley chart shows.

LONDON — Trade in the bitcoin market done in Chinese yuan collapsed in 2017 following a government crackdown.

The US dollar grew to prominence to become the most popular bitcoin currency pair by the end of 2017, regaining a dominant market position it last held in early 2014.

A chart from Morgan Stanley, prepared as part of its recent "Bitcoin Decoded" note, shows the shifting composition of bitcoin-to-fiat trades across the years:


Morgan Stanley

It should be noted that the above chart is not a perfect proxy for geographic spread of bitcoin trade — the US dollar is used in many countries outside of the US, for example. But as a rough guide to the global spread of bitcoin trade, it makes a useful starting point.

Yuan-to-bitcoin trades collapsed from over 90% of the market in December 2016 to under 30% in January 2017. The collapse coincided with the People's Bank of China (PBoC) opening an investigation into the country's largest bitcoin exchanges, to look into possible market manipulation, money laundering, and unauthorized financing.

The crackdown culminated in China banning cryptocurrency exchanges in September and the major platforms winding up operations. As of November, yuan-to-bitcoin volume is 0%, according to Morgan Stanley's chart.

The declining yuan volume has coincided with a growth of US dollar, Japanese yen, and euro trade in the bitcoin market. Bitcoin's 1,500% rise against the dollar in 2017 has spurred retail investors across America to look at the digital currency, with rising interest from institutional investors too.

Japanese volumes have grown after the Japanese government recognised bitcoin as an authorized method of payment in April of this year.

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