What Sparked Bitcoin Rally Last week?
After rally by nearly 35% last week to hit $10,060 on Saturday, Bitcoin seems to have lost momentum, with the cryptocurrency falling to $9,305 at the time of writing this article.
The roughly $3,300 rally seen last week has raised eyebrows among investors and crypto enthusiasts in general. Many have started speculating that Bitcoin is on course to reach $20,000 in the months ahead.
However, before coming up with outrageous forecasts, one should clearly understand the reason for such an uptrend.
Of late, there have been no major technical developments related to Bitcoin. So, the speech given by Chinese President Xi Jinping can be construed as the major reason for the surge in the price of Bitcoin.
On October 25, Chinese media reported that President Xi encouraged the adoption of blockchain “as an important breakthrough for independent innovation of core technologies” while speaking at the Political Bureau of the Communist Party’s Central Committee.
The media further stated that Xinhua disclosed that Xi appreciated the likely benefits of blockchain technologies in a diversified range of industries, such as finance, healthcare, education, food security and more.
Bitcoin surged soon after the news was publicized. However, as per Dovey Wan, founding partner of Primitive Ventures, Chinese speculators had little to do in the uptrend.
Wan, while talking to crypto television outlet BlockTV, stated that her belief is that the rally from $7,300 to $10,600 was sparked by traders in the West. She also opined that the surge was basically caused due to an overreaction and panic short-covering.
Wan later stated that Tether’s USDT traded without any premium on China’s OTC markets and only in the US session Bitcoin buying spree took place. Wan also highlighted that Bitcoin trading volume was not centralized on Huobi or OkEX.
Crypto analyst Alex Krüger came up with data that runs parallel to Wan’s analysis. The macroeconomy and crypto researcher pointed out that on Baidu, which is China’s most popular search engine, search for the term “blockchain” skyrocketed and recorded a historical high causing Bitcoin to move up marginally.
Interest in Bitcoin in China has barely edged up. Chart shows Baidu searches for Bitcoin (blue) vs Blockchain (red). Looks very conclusive to me, particularly so given the price spike. pic.twitter.com/UGwU5416jO
— Alex Krüger (@krugermacro) October 26, 2019