The Bitcoin community had a reason to rejoice this weekend as the digital currency broke the impasse to cross $610. The popular cryptocurrency has been hovering at around $570 since the past one month after falling from a high of $750 following the Bitfinex hacking incident.
Like many times in the past, the sudden movement of Bitcoin price is attributed to an increased interest in the digital currency among Chinese investors. China plays a major role in the Bitcoin economy. From mining to trading, the country’s Bitcoin community is heavily invested in the ecosystem. The Chinese mining pools already contribute over 50 percent of the total hashing power on the Bitcoin network.
The deteriorating valuation of Chinese Yuan has renewed investor interest in Bitcoin. The brief period of optimism in the Chinese economy seems to have vanished following the ongoing G-20 summit. During one of the sessions, Both China and the United States decided to stay off the devaluation game.
The fact sheet presented by both the parties states,
“[both China and the US will] refrain from competitive devaluations and not target exchange rates for competitive purposes… [China will] continue an orderly transition to a market-determined exchange rate, enhancing two-way flexibility. China stresses that there is no basis for a sustained depreciation of the [yuan]. Both sides recognize the importance of clear policy communication.”
With China refraining from taking any drastic measures to correct the country’s failing economy, Yuan is expected to fall further against US Dollar. In the current situation, the Chinese are turning towards Bitcoin to conserve the value of their earnings. The presence of strict capital controls forces Chinese investors to buy Bitcoin at a much higher price than that of international markets, which is another contributing factor to increased Bitcoin prices.
As the Chinese continue to invest in Bitcoin, there is a significant increase in demand for the global currency. The increased demand is being reflected in the recent variations in Bitcoin price.
Ref: South China Morning Post | Zero Hedge | Image: NewsBTC | Chart: CoinMarketCap Disclaimer: The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of NewsBTC