Why the Price of Bitcoin Has Jumped 25% in Four Days – Barron’s

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Just in time for Halloween, Bitcoin has come back from the dead.

The worlds most-traded cryptocurrency has jumped 25% in a matter of days, rising above $9,300 in Monday trading from just under $7,500 on Oct. 25.

This is effectively the coins second revival this year. After beginning 2019 stuck around $4,000, it surged over the summer to $12,000 before receding in recent months.

After an extended period of low volumes and dismal sentiment, in a sudden instant, last Friday the crypto asset class has snapped back to life, eToros Mati Greenspan wrote in a note to clients Monday.

Whats behind the sudden pop in price? Greenspan points to China. The announcement from Chinese President Xi Jinping that China should seize the opportunity to adopt blockchain has had a sweeping impact, Greenspan noted. Xis comments came just a day after Facebook chairman and CEO Mark Zuckerberg warned Congress that if the U.S. didnt lead the way in digital currenciessuch as the one his company has proposed, LibraChina would seize the advantage.

The timing of those two comments mean that the U.S.-China trade war now has a new battleground, according to Greenspan. After focusing on agriculture, imports-exports, technology, patent infringements, and spyware, the focus is now squarely on FinTech.

Chinese authorities have said they want to crack down on Bitcoin mining, citing its intensive electricity use as wasteful. (They probably also arent overly enamored with a coin that could help people hide capital from the government.)

Even though it might seem like a contradiction, Xis announcement that he wants Chinese companies to invest in blockchain isnt actually a departure from the governments seemingly antagonistic stance toward Bitcoin. Rather, it is a continuation of a government-led process to explore digital currency, including an effort by the Peoples Bank of China to develop what might turn into a sort of electronic yuan.

Any such effort would, of course, be strictly controlled by Chinas capital controls, but Greenspan thinks the government has effectively taken a live-and-let-mine approach toward Bitcoin: Cryptocurrency is just widespread enough to merit policing resources, and there are far bigger security and capital-control gains to be had in developing an official Chinese blockchain.

Write to Ben Walsh at ben.walsh@barrons.com

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Why the Price of Bitcoin Has Jumped 25% in Four Days - Barron's