Bitcoin can be frustrating. If you are a religious Hodler through the Monfex site, you will admit that Bitcoin is one of those assets that sometimes has you gnashing your teeth. The frequent fluctuation of prices can be so irritating that even the most loyal at times find themselves, nodding to the words of a fierce crypto critic like Nouriel Roubini. And it is different things that affect the prices. This article primarily discusses the Chinese influence on Bitcoin.
The Bitcoin Bull Run that kicked off back in April was touted as the “IT” rally. It was hyped up like the second coming by many commentators which had many traders placing buy orders. The crypto chatter attracted more long orders and price began to skyrocket. Ambitious predictions like Tim Draper’s $100,000 per coin, as well as the bullish words of RT’s Max Keiser, rang loudly in people’s ears.
The market flew north taking the riders high with it, only to slip back a month later. It’s been sideways ever since until good old China came to the rescue.
Chinese influence on Bitcoin
At a time when the Bitcoin prices were staggering below the $9,000 mark, China president Xi Jinping mentioned blockchain in his speech. China’s history with Crypto and Blockchain had been very icy before the speech, so everyone expected that if the words Blockchain or crypto were to leave Jinping’s mouth; it would be in a negative way. What followed left many commentators shook.
The Chinese president was not calling for tightened and more stringent approaches towards crypto, he wasn’t calling for a ban on crypto advertising either like the now Libra cheerleaders once did. He said that China should seek more opportunities related to Blockchain.
This was huge and crypto twitter blew up for good reason. As mentioned before, China was not very friendly to crypto. Chinese miners faced difficulties with the government due to the huge footprint the process left behind. Not to mention the cost of electricity that the mining consumed from the national grid. The central bank of the country was not a big fan of crypto either because just like others around the world, it viewed the technology as a threat.
President Xi Jinping’s speech marked the start of a new crypto sentiment in the country. He said that China had ambitions of being a world leader in the crypto sector. He then went on to point to some possible quick use cases for Blockchain technology in his country namely in Health and Finance. His comments sent the Bitcoin markets into a frenzy. Price pushed north steadily as the news broke, leaving many wondering where its ceiling would be in that rally.
Not yet crypto, or is it?
The Chinese were quick to make clarifications after Jinping’s speech. They did not want the world and Chinese traders to think that China had officially made trading crypto legal. China still does not allow initial coin offerings. This did not seem to put a damp on the price rally though. Though many are increasingly becoming apathetic when it comes to crypto prices, it’s important not to forget that Bitcoin had gained by 150 percent in 2019, before the speech by Chinese President Xi Jinping. That is more than any other asset has recorded, so this is a pretty good year for Bitcoin.
Though Chinese officials have told media that the country is not warming up to crypto as much as people think, events in china tell a different story. Chinese officials that once had anti-crypto posts on their gadgets are reportedly getting rid of them. Posts about crypto being a scam are becoming very scarce in China. Chinese social media platforms are also blocking anti-crypto content which is in stark contrast to what was happening before.
It doesn’t end there; China’s most downloaded app Xuexi Qianguo will reportedly feature crypto educational content. The app will reportedly feature educational material on crypto tokens Bitcoin (BTC) and the second-largest token by market cap Ethereum (ETH). Though it is still unclear what the content will be about specifically, it forms part of a course that is recommended known as “Focusing entirely on Blockchain”. The president’s communist party has also unveiled a tool that will help party members familiarize themselves with the technology.
New Attitude towards Bitcoin
This new attitude by the country’s president has affected Chinese industries. The finance industry has picked up on this quickly. The deputy head of the state of administration of foreign exchange (SAFE) in China Lu Lei revealed that the industry was looking into Blockchain technology and artificial intelligence in international financing with a specific focus on risk management procedures. Lu also mentioned the much talked about Libra project while revealing China’s Blockchain moves. He said that despite the heated debates over the Libra stablecoin, China would go ahead and explore the application of Blockchain and A.I technologies in international trade finance and macro-prudential management. Lu said;
“We need to pay special attention to the rapid development of digital finance and fintech. When we are not entirely certain where a (new) form of business is heading, we must pay attention to risk management.”
China’s activities involving the Blockchain have had an undeniable effect on price. The timing of the Bitcoin rally and president Xi Jinping’s speech, suggests a strong connection. It is not far-fetched to say that the gains being seen in price have everything to do with China. There is one little problem though, President Xi Jinping did not mention China in his speech and crypto trading is still not legal in china. This raises the question did Chinese buyers who rushed to buy, misunderstand the president? Maybe industry pundits and traders saw Jinping’s speech as an indicator for a price rally and it became a self-fulfilling prophecy. Whether Jinping was misunderstood or not, prices tend to react quite dramatically to news coming out of China.
The above speaks to the country’s influence in the industry and its hold on the market. It is unclear whether China is opening its arms fully to crypto and Blockchain. The moves made by the Chinese officials, the Chinese finance industry, and the downloadable crypto education on the country’s most popular app, give indications of a possible breakthrough for crypto in China.
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