Is China’s Importance in Crypto Space Likely to Creep Back?
From mining to trading cryptocurrencies like Bitcoin and the use of blockchain technology, China is known to play a crucial role in the global crypto space. The role and its influence on the crypto market seemingly reduced in the last two years due to stringent measures put in place by the Chinese authorities to stem the outflow of capital from the top global economy through digital assets. However, recent developments may be pointing to the resuscitation of China’s impact on Bitcoin price swings.
They include factors that have elements of China-related involvement. The ongoing trade war between the US and China has been suggested to be a key factor in the recent surge in the price of Bitcoin. With no end in sight yet, hurting Chinese businesses or individuals are liable to resort to Bitcoin to safeguard their investments. A Reuters report says that Hong Kong tycoons have started moving their personal wealth offshore as concern deepens over a local government plan to allow extraditions of suspects to face trial in China for the first time.
At the same time, the likes of global cryptocurrency exchange Binance is preparing to launch trading services for users in the US through a partnership with BAM following its recently approved FinCEN registration on June 11. According to the CEO of Binance, Changpeng Zhao (CZ), Binance US will serve the U.S. market in “full regulatory compliance.” Opening a US division will allow Binance customers there to trade crypto legally though they have never been allowed due to KYC requirements. This could also bridge a gap between how crypto-related businesses are conducted between the US and China especially in the face of growing infrastructure and fundamentals.
A contributing factor on a global scale is the continued advocacy for Bitcoin to be the money of the Internet by the co-founder of Twitter, Jack Dorsey. Dorsey also founded Square’s Cash App used by more than 15 million people for peer-to-peer payments and offers bitcoin trading since January 2018. In an interview with Quartz, he maintains that the internet needs a currency native to itself like there are currencies for every nation state and Bitcoin fits the profile. He cites its resilience to security threats, governments, forks, agendas from miners, nefarious nation states etc as substantial as well as having the brand, pure principles, a deflationary feature and the probability to increase in value. To him, Bitcoin being the internet’s currency will “allow companies like ours to move much faster and reach a lot more people…I think provides a lot of clarity, enables a lot more innovation, and most importantly creates a probability of much greater access for more people.”
As a powerful social media site that can influence similar global microblogging platforms alike, Dorsey’s Twitter could appeal to what a study by five Chinese scholars in North America suggests is the silent majority which exerts a more significant effect on social media sentiment as an important leading indicator of future bitcoin price swings. Their argument is based on the view that “social media offer substantial novel information about bitcoin’s demand among the general public as well as daily fluctuations in its market sentiments”. The crypto space has changed in the last two years hence the spread of relevant information on social media could reawaken China’s interest in Bitcoin on a big scale.