CryptoCurrency Prices Rebound From Last Week’s China News
Bitcoin is slowly recovering after last week’s dramatic plunge. This week, it hit a high of $4500, and by Wednesday it was ranging between $3800.57 and $4069.50.
On Tuesday 19th September, the market experienced a massive drawdown, but the sales were later absorbed thus stabilizing the price. This is a sign that some people were taking profits. By Wednesday the prices had gone up a bit, and it might continue going upwards.
The growth is expected to continue going on an upward trend for the rest of the year. This is an indication that the market is regaining confidence in the coin and things are looking up. However, most people are wondering whether China will continue to affect the global economy in other ways and what lies ahead for cryptocurrencies.
Advantages and Disadvantages of Bitcoin in Chinese Society
Zhou Ziheng, a professor at the Finance Academy of Social Sciences Institute of China, said in a recent interview that government officials are well aware that the new ban can have a great impact on the country’s economy. They are aware that cryptocurrency has both its advantages and disadvantages in the society.
One of its advantages is that it avails great opportunities for innovation whether in the financial sector or the technology world. On the flipside, cryptocurrencies technology poses a threat to traditional financial institutions which are the cornerstone of the country’s infrastructure.
Cryptocurrency had grown to monumental proportions in China, and the government feared that it could destabilize the country. The professor also pointed out that the Chinese government took the measures to restrict cryptocurrency to prevent such threats from becoming a reality. This regulation, he translates to mean that it marked an end to an era of a vibrant private digital currency in China and the beginning of a new era where money digitization innovation will be governed by the laws of the country.
In his opinion, the digital or quasi-digital currency has various limitations which prevent it from becoming accepted as a legal currency or approved by financial institutions in China. One of the shortcomings is that cryptocurrencies cannot be used publicly such as in paying taxes, for purchasing products or be included in a company’s financial statements. Thus, it is not a strong currency and cannot qualify to be used publicly like other legal fiat currencies.
Strengths of CryptoCurrencies in China
Despite having these glaring shortcomings, Ziehung also notes that digital currencies have their strengths as well. One of their greatest advantages over the banking system is their ability to allow transactions to be timestamped meaning that a transaction happens at one specific time which creates room for freedom and efficiency. Digital currency’s superiority over banks is the main reason that it stands a chance to continue existing in the Chinese market.
It should be noted however that China’s economic structure is a bit different from the rest of the world. The belief that cryptocurrencies cannot be used in public may only be unique to China because, in other economies such as the Czech Republic, the digital currency has received a greater acceptance and is used in the public space. China being a conservative economic system could be the reason it has taken steps to restrict its growth since the government might not be able to keep up with the rate at which it is growing.
Speculation on Mining
The market is still wary and is speculating whether the mining industry will also be investigated as evidenced by the fluctuating prices in BTC-USD which have been hanging below the $4000 mark for a better part of this week. This week also saw China begin to use yuan instead of USD to exchange oil which is seen as a move by the country to strengthen its currency and make it one of the major fiat currencies in the market.
This could be the reason the government was bent on controlling the normalization of cryptocurrency in the country. The professor concluded that digital currency’s importance cannot be refuted. Its regulation depends on each government of the world and its unique interests.
The China cryptocurrency exchange ban is behind us now. However, traders should watch out for SegWit which is thought to be next big issue that has the potential to shake the cryptocurrency market.