The price of bitcoin has continued to surge since early morning, opening at around US$674 and surpassing the US$685 mark on most major bitcoin exchanges.
Financial analysts and bitcoin experts presume a short-term break out, as the current trend of the bitcoin price hints a potential target of US$800.
#Bitcoin: Just like in late May at $420, it looks like we’re breaking out of another triangle. $800 seems like a fair target. pic.twitter.com/XXSO5Q9IPD
— Tuur Demeester (@TuurDemeester) October 27, 2016
Over the past few weeks, investors and traders have cited the devaluation of the Chinese yuan as the main factor that has pushed the price of bitcoin further. While this itself could be considered as a convincing argument, financial experts believe it is the Chinese government’s tightening regulations on wealth management solutions that is driving the demand for bitcoin.
At the moment, the value of bitcoin in most Asian markets including South Korea and China is held at around US$700.2, a valuation substantially higher than the average US$683.
As Bloomberg and Citigroup stated, China’s shadow-banking system could lock up around US$1.9 trillion worth of assets, and if a portion of this wealth management funds was allocated into bitcoin, it could act as a catalyst for its price surge.
Mainstream financial outlets such as Zerohedge notes that such allocation could push the price of bitcoin further, most likely to the US$800 region.
“Should the crackdown on WMPs persist, it may be just the catalyst to push bitcoin above its recent multi-year highs just why of $800 hit earlier this summer.”
That means, if an increasing number of mainstream investors and high profile traders continue to look for alternative assets of value like bitcoin, millions if not billions worth of Chinese yuan could circulate in bitcoin exchange markets and over-the-counter markets worldwide.