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Bitcoinâs price recorded a minor correction yesterday, dropping from US$4,010 to US$3,850 after showing early signs of recovery this past week.
Upon the finalization of the closure of Chinese bitcoin exchanges and trading platforms, bitcoinâs price rebounded quickly from US$2,900 to US$3,800. Traders bought the dip and institutional investors including JPMorgan engaged in bitcoin trading through regulated channels such as the Bitcoin XBT via Nasdaq Nordic. This caused the price to surpass the US$4,000 mark.
As bitcoinâs price continued to recover, prominent financial analysts and traders in the cryptocurrency sector including Max Keiser and WhalePanda expressed their optimism toward the short-term trend. Keiser reaffirmed his interim bitcoin price target of US$10,000.
https://twitter.com/maxkeiser/status/910245180199989249In the short term, bitcoinâs price could stumble and likely endure additional minor corrections if the Chinese government were to impose strict regulations and restrictions on local bitcoin mining operators. ViaBTC CEO Haipo Yang stated:
âTechnically, China canât ban bitcoin traffic, we have our own sync network. But if the Chinese government says mining is illegal, we are fucked.â
If the Chinese government intends to release a state-owned national digital currency as suggested by the Peopleâs Bank of China (PBoC) and Central University of Finance and Economics researcher Huang Zhen, it could very likely ban every aspect of bitcoin usage in the country. In an interview with PBoCâs own finance news publication, Zhen explained why the Chinese central bank perceives bitcoin as a threat.
âCryptocurrencies and other virtual currencies attempt to challenge the sovereign stateâs right to issue currency, requiring the nationalization of currency issuance. China has a clear understanding of digital forms of money, and is actively engaging in relevant work. The central bank has set up a research group and a digital money research institute to explore the digitization of sovereign money. After this round of virtual money markets supervision, we expect under the auspices of the Chinese central bank to launch our own sovereign digital currency as soon as possible to help maintain Chinaâs leadership in the development of global digital finance,â Zhen stated.
It remains uncertain whether Zhenâs view is shared by the PBoC and the rest of the nationâs financial regulators. Considering Zhenâs involvement with the regulators and his interview with PBoCâs news publication, it is likely that the Chinese central bank is indeed planning to release its own digital currency. If so, acknowledging the Chinese governmentâs unpredictable nature, the PBoC could attempt to ban every aspect of bitcoin in the near future, including bitcoin mining and OTC trading.
Such events could cause several minor corrections in the short term. However, in the long term, the emergence of multi-billion dollar Japanese conglomerates in the global bitcoin mining industry and the strengthening South Korean cryptocurrency trading volume will even out the exit of Chinese traders. Some analysts suspect that the bans could even be positive for bitcoin because the elimination of the Chinese bitcoin market will create a more balanced and distributed global bitcoin industry.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.