Chinese media have reported repeatedly very positive about Bitcoin. This includes private and state-owned media alike. Although it is a very volatile asset, many news agencies mention that Bitcoin has a ‚store of value‘ or
‚safe haven‘ quality.
China’s Stance On Cryptocurrencies
In the past, China had a skeptical attiture towards Bitcoin and cryptocurrencies in general. Although cryptocurrencies from Chinese entities are an exception to this and even received aid and subsidies from the government. Still, the Chinese government is still prohibiting the trade of Bitcoin by law regarding companies and institutions. However, private persons are allowed to buy and sell crypto assets. In April the government announced that it would take its anti-Bitcoin attitude a step further by outlawing mining in the country. As a consequence, other countries like Iran saw a heavy influx of mining activity. Currently, the Iranian government is cracking down on these activities as well. The current development in China could change the regulatory status of Bitcoin.
Economic Uncertainty in China and the World
That the attitude towards Bitcoin is changing positively is probably related to the current state of the Chinese and the global economy. China currently faces the consequences of the trade war. The fear of a global recession is looming in many major markets across many asset classes. To look for safe havens is the logical consequences for this. And while gold had an outbreak recently and continues to look bullish, many eyes are set on Bitcoin as well.
In our last fundamental analysis we mentioned that the performance of the Chinese Yuan against the US-Dollar could trigger capital to flow into safe havens.
Many chinese Investors, private and institutional, are already investing in Bitcoin. Fearing that the Yuan will lose value, the store of value idea which the BTC chain tries to occupy is given a lot of credity in this light. However, in our own technical analysis, we are warning that Bitcoin could still go down lower in the short- to mid-term perspective.