Bitcoin and the China effect

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October 28 2019
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Despite being designed as an open currency that is separate of state, a speech made in China and a United States inquiry have seen the price of bitcoin surge over the weekend.

The roller-coaster ride for bitcoin investors continues as the price of the asset fell sharply mid-month before rallying off the back of Chinese investment news.

Bitcoin’s price soared on Friday by 22 per cent and is currently trading at US$9,600, up from US$7,500, as China explains the importance of the asset classes underlying technology.

The speech from China followed Mark Zuckerberg warning leaders that the US leadership in finance will be further threatened by China if America blocks Libra’s cryptocurrency plans. The Chinese government announced its emphasis on blockchain technology.

Henrik Andersson, the co-founder and CIO of cryptocurrency fund Apollo Capital, believes the timing was on purpose.

“[It’s] no coincidence this comes right after US legislators grilled Zuckerberg for six hours. He even warned the US Congress that China is about to release something similar,” Mr Andersson said.

With China pushing for the development in the alternative asset space, interest in bitcoin spiked in China, with social media platforms WeChat and Baidu showing 300 per cent increases in searches for both bitcoin and blockchain.

Although the asset is currently banned in China, speculation of 1.3 billion new investors entering the market has panicked buyers in the West who believe that China could end up purchasing a large stake in the asset.

This led to Western investors buying up more of the asset as they foreshadow the asset price to skyrocket, and led to the three-day 30 per cent increase.

Future price?

Investors are expecting a short-term cool off for bitcoin, following the three-day surge.

Longer term, some investors are incredibly bullish on the currency.

Cryptocurrency investor group Plan B has shared its belief that by Christmas in 2021, the alternative asset will be worth US$100,000 per share.

Amber CEO Alek Svetski is even more bullish on the asset.

He is of the belief that due to the finite amount of coins available, the price of the coins could one day reach millions.

Still confused about the alternative asset class? Don’t worry, nestegg has the basics of bitcoin covered.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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