Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Did China Cause A Rally In Bitcoin?

By Boris SchlossbergCryptocurrencyAug 18, 2021 02:55AM ET
www.investing.com/analysis/did-china-cause-a-rally-in-bitcoin-200599177
Did China Cause A Rally In Bitcoin?
By Boris Schlossberg   |  Aug 18, 2021 02:55AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • CCP’s rampage against the markets may have triggered flows into Bitcoin
  • China’s attempt to control crypto may be behind the 50% rise off the lows
  • Political power play in China should keep Bitcoin well bid.

Bitcoin is up 50% of the lows and there are a plethora of reasons why the crypto currency has rallied, but perhaps the most important one is one that is least discussed – China.

China is usually seen as the reason to for Bitcoin’s swan dive in April after the Chinese Communist Party (CCP) instituted a crackdown on mining which reduced  the country’s global share of mining from 70% to  close to 40% today, but other decisions by the CCP may have had as much of an impact on the rally of Bitcoin as they did on the cryptocurrency’s decline.

During the week of July 23 Chinese authorities issued a series of decrees that roiled the capital markets. First, Chinese authorities lashed out at Didi (NYSE:DIDI), the giant Asian ride sharing concern that IPO’d in the US against the government’s wishes. The regulators effectively kicked off DIDI apps from Chinese mobile platforms, effectively destroying the company’s business. Next the authorities trained their focus on the Chinese prep education industry wiping out $700 billion dollars in market capitalization for the sector in a matter of days.

Although investors in the West certainly took notice of these moves, the general reaction of the markets was to shrug off these events as internal matters. For Chinese entrepreneurs however the message was far more potent. It was clear that CCP allegiance to capitalism and most importantly property rights was thinner than rice paper and the heavy handed tactics by the government may have triggered a massive wealth exodus in the country as citizens liquidated assets to convert to Bitcoin.

BTC/USD Daily Chart
BTC/USD Daily Chart

Although it’s impossible to tell given the anonymous nature of Bitcoin trading, it may not be a coincidence that the latest Bitcoin rally started on the day of Chinese regulatory actions. 

Shuyao Kong, an analyst at blockchain software company ConsenSys notes that, “Fundamentally, Bitcoin is in a different paradigm from the Chinese political structure. Right now, [China’s government] cracks down on anything that it doesn’t have control over. Bitcoin is one of those things that it doesn’t control.”

Conversely, it is precisely because CCP cannot control it that Bitcoin is so attractive to the Chinese populace. It is in fact the only way for Chinese citizens to protect their wealth from the long arm of the CCP. So Bitcoin remains inextricably tied to the politics of China. While in the West it serves as nothing more than a speculative instrument and a play on libertarian fantasies, in the East it is in fact the only real form of wealth protection and as long as the CCP continues to assert and expand its control over the markets the value of Bitcoin will rise.

Did China Cause A Rally In Bitcoin?
 

Related Articles

Crypto Briefing
OlympusDAO Sheds 30% Triggered By Whale Sell-Off By Crypto Briefing - Jan 18, 2022

The price of OlympusDAO's OHM token is taking a dive.Key Takeaways The OHM token price fell from $186.61 to $104.60 Monday morning, but has since recovered slightly. The token was...

Did China Cause A Rally In Bitcoin?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email