The 16% jump in bitcoin’s price in the past four days has largely been driven by Chinese investors, according to The Wall Street Journal , despite government efforts to curb bitcoin trading.
The surge, which pushed bitcoin to $525.49 on Monday, has added $1.2 billion in market capitalization. The surge is also credited to the expected drop in bitcoin supply next month due to an expected cap on bitcoin supply.
OkCoin and Huobi, Chinese bitcoin exchanges, collectively account for 92% of world bitcoin trading. In Search Of New Assets
Chinese investment could reflect a move away from certain asset classes in search of better returns, the article noted. There has been massive investment in bonds, equities and commodities in the past year. Surges in investing have been followed by price collapses when funds move to other assets.
Du Jin, chief marketing officer at Huobi, said funds are presently in search of investment vehicles. The exchange has experienced a growth in new registrants in the past month, he said.
There is also an expectation that a new supply of bitcoin will subside next month that could also be fueling the current price surge. A mechanism (known as “halving”) cuts the number of bitcoins created through bitcoin mining every four years in order to limit supply. More Innotative Options Sought
Observers say there are other factors specific to China fueling the price surge.
Hudoba’s Du Jin said there have been stories about scams in peer-to-peer financing that are pushing investors to more innovative types of investing such as bitcoin.
The bitcoin network also provides ways for traders to move funds beyond the country’s tightly-controlled borders by accessing digital platforms via the Internet.Bitcoin, when priced in Chinese yuan on mainland Chinese bitcoin exchanges, trades at a 7.2% premium compared to counterparts that price the currency […]
