After a month of dreaded stability, the price of Bitcoin began to surge rapidly, increasing from US$590 to $610 in a matter of hours.
Amidst many speculations, financial experts believe that the ongoing rally in Bitcoin price is highly affected by an unexpected devaluation in Yuan announced during the G20, an international meeting of the governments and central bank governors from 20 major economies.
Yuan Devaluation Pushing Demand
China, despite the unclear regulatory frameworks and policies established by the government, maintains the largest Bitcoin market in the world, with some major exchanges with substantial trading volumes and demands. Research institutions and financial companies presume that the devaluation yuan pushed the demand for Bitcoin further, causing local investors to purchase Bitcoin at higher prices.
Investors and traders on OKCoin, China’s largest Bitcoin trading platform, have been trading Bitcoin at around US$614 on average over the past 24 hours, due to an overwhelming demand from the local population.
Market Recovery
In contempt of the price stability of Bitcoin, the Bitcoin network’s hashrate demonstrated strong mining margins over the past year, increasing exponentially since October, 2015.\
As shown by the chart above, the hashrate of the Bitcoin network in late 2015 averaged at around 380,000 TH/s (one trillion hashes per second). As of September 2, the hashrate recorded nearly 1.7 million TH/s, indicating a significant increase in the power and stability of the network.
The consistent increase in hashrate and market recovery after the Bitfinex hack indirectly contributed to the ongoing rally in the price of Bitcoin.
Immediately after the public announcement from Bitfinex regarding their security breach, mainstream media outlets began to report the impractical implementation of the multi signature technology led by the Bitfinex development team, in a unified attempt to disprove that Bitcoin itself wasn’t hacked. A case very different from the Mt.Gox fiasco in 2013.
With stable market recovery, exponential increase in hashrate, and market instability of other major currencies like yuan, the demand for Bitcoin began to skyrocket, leading to the price surge happening at this moment.
By the time of writing, the price of Bitcoin is relatively stable at US$610. If the trend continues, the Bitcoin price could potentially break US$620 margin in the next few days.
Sources: Blockchain, OKCoin, Image Credit: JPTimes