Nov 22, 2019 06:23 AM | Kyle Torpey
The Bitcoin price rose roughly 18% from around $7,450 to nearly $8,800 today following comments from China President Xi Jinping regarding the importance of blockchain technology. According to Xi, the technology has the potential to benefit the country in areas ranging from education to medicinal safety.
The Bitcoin price had been struggling recently after a drop below the $10,000 mark in late September. Bitcoin is still down 40% from the 2019 high of nearly $14,000 reached back in June; however, today’s gains have erased the sharp 6.5% decline from earlier this week.
The news of Xi’s comments was reported in China at 6:14 AM EST, and the Bitcoin price began to climb a few minutes later. There was an initial spike to the $7,600 area in the first hour after the comments were reported, followed by a much larger spike from $7,700 to $8,400 in a matter of minutes just before noon in New York. A third spike to nearly $8,800 occured after 1:00 PM.
In his remarks, Xi stated that China should expedite the development of blockchain technology in the country. In his view, this focus on blockchain technology will increase China’s influence and power in terms of its role as a global policymaker. Xi also sees blockchain technology as a base tool for the development of new smart cities.
China has a good foundation in the blockchain field, said Xi. It is necessary to accelerate the development of blockchain technology and industrial innovation, and actively promote the development of blockchain and economic and social integration.
The comments were made during a group study session of the Communist Party of China (CPC) Central Committee Political Bureau on the development and trend of blockchain technology, according to Xinhuanet.
While Xi did mention the potential for blockchain technology to solve problems in the financial sector and further develop the digital economy, cryptocurrencies were not a focus of his speech. Over the past five or six years, China has been a source of volatility for the Bitcoin price due to changes in cryptocurrency regulation and rumors around potential blanket bans on the technology.
What Does This Have to Do with Bitcoin?
China has long been part of the “blockchain not Bitcoin” camp, being supportive of blockchain technology while being wary of cryptocurrencies like Bitcoin. In 2017 China cracked down on local cryptocurrency exchanges and initial coin offerings. Chinese authorities were nervous about ordinary people losing their savings due to rampant speculation and scam ICOs. Yet last year, Xi referred to blockchain as a “breakthrough technology.” Last year, LongHash did an in-depth analysis of China’s proposed blockchain legislation.
The connection between Xi’s remarks and the Bitcoin price is somewhat unclear, as the president’s comments don’t have much to do with Bitcoin’s key value proposition as an apolitical, uncontrollable digital money. In fact, Xi even discussed the merits of blockchain technology for use in big data, which noted venture capitalist and PayPal co-founder Peter Thiel has described as on the opposite end of the political spectrum from Bitcoin and encryption.
In the United States, there has been a similar confusion around the differences between Bitcoin and more centralized digital currency projects like Facebook’s Libra offering. However, some U.S. lawmakers, such as Congressman Patrick McHenry, have pointed out the need to differentiate between Bitcoin and Libra.
McHenry has also stated he would support legislation to give the Federal Reserve the ability to issue a new digital dollar. China has been working on their own digital version of the yuan, which is expected to launch in the coming months.
China continues to go down the road of “blockchain not Bitcoin,” but as the price jump shows, investors don’t seem able to differentiate between the two.
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