In late last year, Bitcoin surged past the established resistance to rise in value. In the month of August and early September, the digital currency was valued at around $200 plus with minimum volatility. However, thanks to the global economic conditions, bitcoin price picked up. The sudden increase in bitcoin price was attributed to multiple economic reasons.
The bitcoin price rise was inadvertently influenced by the economic slowdown suffered by Greece and China. The reports on US economy also influenced the increase in bitcoin price. Among all these things, the move to devalue Chinese Yuan turned out to be the major driving force behind increased demand for bitcoin.
What Drove Bitcoin Demand in China?
With the devaluation of Chinese Yuan, people started looking for ways to move money out of the country to invest in assets that are not at the risk of losing its value. Thanks to strict capital controls, the only easy way to convert or move assets was in the form of bitcoins. This allegedly led to an increased demand for the digital currency, leading to a price surge.
In a brief period, the Chinese bitcoin exchanges registered record traffic and sale of the digital currency. During this time, one of the leading bitcoin platforms in the country, Huobi broke all its previous records by selling a huge volume of bitcoin in a day. While industry experts identified the cause for a sudden increase in demand and predicted the value of bitcoin to grow upwards, conventional economists and armchair finance gurus decided to draw the world’s attention away from the root cause by fabricating a theory.
Why did they do that? Only they can answer. But if we have to speculate, they did not want to accept that the well-established monetary system is in peril and they definitely didn’t want bitcoin to gain credit for being a savior to those who wanted to safeguard their savings and/or assets. In order to draw the world’s attention away from bitcoin and to make the developments sound trivial, they attributed increased bitcoin demand to a well-known Ponzi scheme run by a Russian ex-con. Mainstream media picked up the story of MMM-China investment scheme being responsible for the sudden increase in bitcoin demand and ran with it.
If we dig a bit deeper, we will realize that more people had a clear picture of what’s happening than it was earlier assumed. Going by a recent report on Zero Hedge, an online publication that covers cryptocurrency and global economy, many people including Mark Hart – a less known hedge fund manager who predicted the subprime crisis and US economic recession in the last decade used this knowledge to make the right investments. Mark Hart was seen sharing it on an interview with Raoul Pal on RealVision.
There is one conclusion to be inferred from these incidents. The world out there is not so kind towards bitcoin, for it challenges the very structure that was built to exert control over the masses by controlling one thing, money (finance). And, it is not going to change anytime soon, even as its adoption continues to grow.
Ref: Zero Hedge