Rising Demand in China, Other Asian Countries May Push Bitcoin to $5000 by Aug. 30
There are about 15 more days left in the month of August 2017 and Bitcoin price seems to continue recovering from the stunted growth it has seen since the scaling issue heated up earlier this year.
After the split of Bitcoin Cash BCH and the issue of the uncertainty – and its debate traced back to 2010 – surrounding what is to come if it happens has been put to rest, the legacy Bitcoin BTC network has seen a reinforcement that made its market share gain about $10 bln in the following week to reach about $70 bln of the entire $134 bln cryptomarket.
Most bitcoin exchanges in China including OKCoin, Huobi and BTCChina, allocate BCH to users and list the BCH/BTC trading pair on their trading platforms thus bringing the cloned version to many users – it is estimated that China dominates about 40% of its trading market. The easy access granted to users, going by today’s market scene, has shown that the loud minority that has sought to co-opt BTC has been put aside and it has worked out well for the entire ecosystem.
While Blockstream’s Samson Mow notes that BCH chain may survive with its value likely dipping below $100 as its current price of about $300 is artificially inflated due to many exchanges refusing to accept deposits, the August 1 split almost coincides with other eventualities that have seen BTC price rise to and consolidated at over $4000 and even indicate a growing trend.
The rise in BTC’s demand in China, Japan, South Korea and India has collectively resulted in BTC market capitalization seeing a daily transaction volume of over $1 bln since August 1 and in some instances over $2 bln according to Coinmarketcap – it even crossed over $3 bln on Sunday August 13.
BTC’s ability to maintain its network effect and market value made it handy as tension rises in the South China Sea in which the Chinese have been responding to what they described as the U.S. Navy’s “provocation” that will “compel China to take measures to further raise its capacity to defend national territory”.
Aside the territorial dispute in the South China Sea, there is also the tension between South Korea and North Korea over the deployment of a U.S.- supplied missile defence system.
The prospect of war will undermine the demand for regional currencies especially those mostly used by the countries involved: in this case yuan, yen, won and the US dollar. This is because of the market instability that could arise in such a situation. Hence, it could be a reason why there has been an increased flow into Bitcoin which is neither controlled by a government nor affected by the effect of global uncertainty on a particular national currency. The digital currency fits as a hedge when there is a mistrust of national currencies and the likely sell-off of store of value assets such as gold which is tied to the US dollar.
Between August 1 and today, Bitcoin price has risen by more than $1400 (about 50% increase). As the tense situation remains unchanged among these countries and BTC price continues to rise as it has been in the last few days, coupled with the expected activation of the Segregated Witness solution on the Bitcoin network in some days, the remaining half of August may see the jolly ride continue with the market price seeing a $5000 BTC by August 30. A correction may be lurking around the corner though.