We all observed a surge in the bitcoin price during Greece crisis right before it took a nosedive to reach a low of about $190. The bitcoin prices have recovered a bit so far, hovering around $230 from the past few days.
There is a possibility of the same trend occurring all over again, this time influenced by the Chinese market. The Chinese economy is currently going through an unstable pace, triggered by a sudden dip in the Chinese stock market, followed by devaluation of Chinese yuan and falling markets across the world.
China has been experiencing a huge outflow of economic resources for a while now, effects of which is gradually being felt in the country and across the world as well. The country is known for its strict capital controls, which the Chinese have been circumventing using underground banks. The government has woken up to this trend and cracking down on the operations of these underground financial network which was used to move money across border, evading government oversight.
As the value of Chinese yuan keeps on depreciating, people are growing concerned about the fiat currency deposits they are currently holding in their banks and they are looking for ways to convert their savings or fortune into assets. This has got many Chinese to turn towards bitcoin, the digital equivalent of gold at the moment which is decentralized, not controlled by any government or a central authority.
Moving financial assets across borders in the form of bitcoin is a lot easier than moving gold or actual fiat currency. Apart from few minor conflicts on the technical side, bitcoin has had a good track record in the recent years. The Chinese have been invested in bitcoin for a while now. The fact that the few of the largest bitcoin mining pools are based out of China is a standing example of the extent of bitcoin adoption in the most populous country of the world.
We will soon see a surge in bitcoin usage, especially by those who are interested to invest in assets and move money out of the country. Once it happens, we can surely expect another surge in bitcoin prices. This time, let’s hope that it won’t be followed by another price crash.