I was wondering if
Bobby Lee is correct about how the average Chinese exchange operates, and his observations do seem to be valid explanations of odd marketreactions in China, how can you still make any kind of usable market prediction considering all that fraud. To name a few, he lists, exchanges padding volumes with zeros, selling to itself, repeating past sales to hide low activity and phantom liquidity (via fake buy and sell orders that cause flash crashes when someones marketorder falls right through them), add to that zero fees and you've got a rather explosive mix, that's more destructive than helpful to the market.
If you consider this, then I'm having a real hard time seeing what is supposed to be so bad about the news that China is banning exchanges. If what Bobby says is even a little true, then the ban can't come soon enough in my opinion, in the mean time it might be a good idea for the market to completely disregard any market prices from China, because it looks like they do not have even remotely the marketshare or volume that everyone seems to believe they have and therefore should not have the same impact on marketprice either.
I think this is a good point. Data providers should be advised of it. Bitcoinwisdom, bitcoincharts, bitcoinity, etc. The case is something like this:
(1) Once, it was important to add Chinese data, because it was a large and growing free market.
(2) The facts have changed, and like Mt.Gox before them, the Chinese markets are no longer free, nor growing.
(3) The Chinese data is now tainted. Propagating it hurts the Bitcoin economy and the users of your service.
Tainted might be to nice a word for what's going on, we're talking faked numbers that are off by multiple factors of 10. I'd like to know where the current 10% CNY BTC-marketshare numbers are coming from, because if you can divide that number through 10 then what remains of the total volume then?
I'm starting to believe that the Chinese stake in the bitcoinmarket has been severely overestimated and even more damaging than the whole m-t-Gox fiasco. It might indeed be advisable to just scrap the Chinese exchanges from all charts until it can be proven that they are trustworthy enough to be listed. It's one thing if it's a local joke that a few Chinese are into, but I don't see why the rest of the world should play along with that little game then.