The recent Bitcoin rally that practically pulled the asset back from the jaws of market bears has left analysts and traders scratching their heads for an answer. Nobody knows exactly what sparked the upward momentum that saw BTC jumping 42% from $7.4k to $10k within hours.
As BeInCrypto reported previously, the last time Bitcoin gained more than 40% in a 24-hour period was when it was still trading at $5.65 per coin.
Some fear it could be a well-coordinated attempt at market manipulation. Others argue that it was probably caused. at least in part, by Chinese President Xi Jinping’s Oct 24 speech projecting blockchain as a technological foundation for future innovations. Then, there are also those who believe that the surge happened because western traders overreacted to Xi’s speech.
Xi’s Blockchain Speech Was a Contributing Factor
As BeInCrypto reported on Sunday, the Chinese President’s speech on blockchain was well-received as interest in the decentralized distributed ledger technology and its offshoots skyrocketed shortly after.
However, according to analyst Dovey Wan (@DoveWan), Chinese traders were unlikely to have caused the Bitcoin rally that followed. Her argument is based on the premise that there is a noticeable time lag between when the news about Xi’s endorsement of blockchain came out and the point at which BTC’s steep upward momentum started.
1/ The CCP meeting was held on 10/24 afternoon China time where Xi gave the talk
Unlike conventional practice when news was usually out a few days lag, it’s super prompt this time. Big news came when Xinwen Lianbo broadcasted to the billions just the second day on 7PM 10/25
— Dovey 以德服人 Wan 🗝 🦖 (@DoveyWan) October 27, 2019
Dovey’s argument makes sense considering that there was no major BTC price movement for quite some time after President Xi’s speech was made available to over 1 billion Chinese. So, in all likelihood, she added in a recent interview with BlockTV, the rally was caused by western traders.
But was it an overreaction?
Well, perhaps it was, assuming that Xi’s speech indeed had a role to play in the recent rally. After all, the Chinese president’s speech was, by and large, focused on socioeconomic opportunities in institutionalized blockchain adoption. Bitcoin trading has been banned in China since 2016 and the president’s speech is unlikely to change that law anytime in the future.
Overreaction or Not, Xi’s Speech Is Bullish for BTC
There’s clearly no definitive way to conclusively prove that the Chinese president’s speech had a major role to play in the recent BTC rally. However, the fact that it caused many Chinese to pay close attention to Bitcoin is perhaps a good enough sign for the long-term health of the asset.
This is particularly encouraging for Bitcoin and its brethren considering that despite the ban on cryptocurrency trading, Chinese investors are finding new avenues to invest in the asset class, thanks to offshore funds based in Hong Kong and Singapore.
As BeInCrypto pointed out earlier, growing Chinese activity in the cryptocurrency market is likely to continue against the backdrop of a weakening renminbi. On that count, President Xi’s speech was indeed bullish for the asset class.
Images courtesy of Shutterstock, Twitter.
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