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A couple of days ago news reports about the Chinese government’s decision to crackdown on Bitcoin trading to curb capital outflow started making rounds. The news created panic among Bitcoin traders, leading to a sudden slump in the digital currency’s price. The cryptocurrency which was trading at around $730s suddenly fell below the $700 mark.
The report of China tightening its screws around Bitcoin transactions as a part of its capital control measure is a plausible story. However, doubts about the genuineness of the news report have since been raised by few bloggers and websites. In one such financial blog, the author claims that the website which first published the story might have faked it or published it without verifying the authenticity of the information.
The author supports his theory by stating various reliable and reputed sources which failed to make a mention or even acknowledge the reports of the Chinese government waking up to increased cryptocurrency trading in the country. Furthermore, the author points out that the source mentioned in the original article hasn’t identified himself or herself, which raises more questions than answers.
The article also presents a different view on all the recent trends in the cryptocurrency and global economic sector. For starters, the author writes that the Chinese government doesn’t really care about Bitcoin as the country’s economy is much stronger than it is thought to be. The country receives enough interests from appreciating bonds and commodities to keep the economy cushioned. On the other hand, with respect to the devaluation of yuan, the author reasons that the apparent devaluation is because of the government’s earlier decision to unpeg yuan from USD.
The article also goes on to explain that the actual growth in Bitcoin adoption has happened in countries like India, Venezuela, Egypt and others, whereas the Chinese trading activity has remained constant or maintained a natural progression of growth/decline.
Going by the article, one may end up being convinced that China has no major role to play in driving the Bitcoin market demand or the prices. It also gives a different perspective into the correlation between the understanding of market dynamics and its effect on profitable trading.
At first glance, the article seems to be a well thought-out. However, erring towards the side of caution, unless the Chinese government or any other official source confirms or denies the report of extension of capital controls on Bitcoin, we can’t be completely sure about the new developments in the cryptocurrency sector.
Ref: FinTekNeeks |Image: NewsBTC Disclaimer: The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of NewsBTC.
