Skip to main content

CHINA 2016 BITCOIN BOOM COMEBACK? YUAN HITS 11-YEAR LOW AGAINST THE DOLLAR




Bitcoin’s price has marked a spectacular increase of around 10 percent over the past couple of days in a move that was nothing if not sudden. Comparing Bitcoin’s situation now to that of 2016, analysts and industry experts think that the instability of China’s yuan relative to the dollar could soon shift the country’s position with regard to crypto.



China’s Bitcoin Fever in 2016-2017



Many are comparing Bitcoin’s parabolic price movement of 2019 to that of 2016 and 2017, when the cryptocurrency reached its all-time high price of around $20,000. Now that Bitcoin is up more than 270 percent since the beginning of 2019, it seems only reasonable to make the comparison.
However, many industry experts and analysts, including Alex Saunders, CEO and Founder of Blockchain Education, tweeted that one of the key differences between then and now was China’s position.



Notably, back before China issued a blanket ban on all crypto trading and exchange operations, the country was among the leading nations in cryptocurrency. Chinese investors represented a significant share of the overall market, and they had a serious impact on its development.
Two of the world’s largest cryptocurrency mining chip manufacturers, Bitmain and Canaan, are Chinese companies, and they comprised a serious proportion of the network’s hashrate.
What followed, however, was a full-blown clash with cryptocurrency, as the country’s central bank, the People’s Bank of China (PBoC), banned security token offerings as well. China went on to ban all crypto-related commercial activity as well.

 It’s also worth noting that the Chinese yuan was relatively stronger against the US dollar back then, as can be seen on the chart below.


Is Bitcoin Becoming a Hedge Amid Uncertain International Economics?

In 2019, however, the situation couldn’t be more different. China’s stance on Bitcoin and cryptocurrency remains legislatively negative. However, there have been some positive developments in this regard. Last year, President Xi Jinping called blockchain technology a part of a “new industrial revolution,” sparking expectations of a potential lift on the blanket ban.
Going further, there are growing tensions between China and the US, especially after US President Donald Trump’s recent announcement of yet another round of tariffs on $300 billion worth of Chinese goods intended for import to the US.
It’s also the case that the Chinese yuan is increasingly unstable against the US dollar, recently breaking below the 7-peg and hitting 11-year lows.

 According to popular Bitcoin permabull and former Wall Street hedge fund manager Michael Novogratz, all of the above could be the reason for Bitcoin’s latest rally, and that the latter could be well-justified.


The question that everyone is trying to answer now is whether we are on the eve of yet another Chinese comeback, similar to the one that we saw back in 2016.


Comments

Popular posts from this blog

Bitcoin Hash Rate Hits All-Time High: Here’s How It Works And How It Affects The Price

Bitcoin intelligence, data, and analytics firm Glassnode found the Bitcoin hash rate hit a new all-time high over the weekend, ten days before the Bitcoin halving event. In other words, miners are putting more computational power into maintaining the Bitcoin network. Because miners must venture electricity and capital intensive computer processors to mine Bitcoin, the increase in hash rate is a bullish sign. It means miners are after the Bitcoin rewards they get from maintaining the network. And they’re venturing the resources to go after those rewards. Is The Bitcoin Hash Rate Correlated With The Price? In general, the Bitcoin price and the hash rate are not correlated. The price is what buyers and sellers agree to pay for one Bitcoin, and there are many factors – external and internal – affecting the price. However, there is a relation between the two. While the price goes up, it’s more profitable to mine, which likely to cause more miners to turn on their mining equ...

IN THE NEW DECADE, CRYPTO WILL BECOME ESSENTIAL LIKE EMAIL: SAYS TYLER WINKLEVOSS

It’s the start of a new decade, and industry famous twin Tyler Winklevoss, the co-founder, and CEO of cryptocurrency exchange and custodian company Gemini Trust, has shared his views on what the next ten years hold for crypto. According to Winklevoss, crypto is already becoming more than a niche technology and a form of money, and it will play an essential role in our daily life in the foreseeable future. “Today, crypto is still a niche technology and a form of money. It is not crucial to your everyday life the way email and other web applications are, but our thesis is that this will change — it’s already changing if you look close enough,” Winklevoss wrote. Winklevoss added that the decentralized nature of cryptocurrencies, which empowers individuals, will be the driving force within the new decade. Crypto will not only redesign the internet but will also redesign the financial and monetary systems to protect the rights and dignity of users, he said. The Winklevos...

Qatar Blocks Cryptocurrency Services Throughout The Gulf

As the new year begins, Qatar’s Financial Center, the nation’s regulatory authority, has issued a blanket ban on cryptocurrency-related services in the Gulf nation. The prohibition covers not only cryptocurrencies but “anything of value” that could substitute fiat currencies. Qatar Bans Cryptocurrencies The Qatari Financial Center, which is also the nation’s regulatory authority, has issued a statewide ban on cryptocurrencies and other digital assets that might substitute traditional fiat. Per the report , the authority stated that: “Virtual Asset Services may not be conducted in or from the QFC at this time.” It also reads that this goes for “Anything of value that acts as a substitute for currency, that can be digitally traded or transferred and can be used for payment or investment purposes.” However, it’s also worth noting that the ban doesn’t cover digital forms of securities or other financial instruments that are thoroughly regulated by the Regulatory Authority, ...