Both blockchain and cryptocurrencies have reentered the Chinese consciousness after the nation’s leader, President Xi Jinping, lauded the technologies in a political statement. His statement has led to an influx of interest in blockchain from all corners of the nation.
In fact, social media application WeChat’s statistics have shown that searches for the Chinese terms for “Bitcoin” and “blockchain” have surged by two to three times and 12 times, respectively.
Also, China’s publicly-listed companies with blockchain elements have rocketed higher on the Shanghai Stock Exchange, with dozens of stocks hitting the 10% breaker limit during Monday’s trading session.
Even overseas, a Chinese company listed on the NASDAQ, which some called a “blockchain concept stock,” rallied by 100% in a day’s time.
In short, there’s (or at least there was) “crypto mania” in China all over again. But, Chinese state media is now urging investors to remain rational, as not to replicate what was seen in 2017.
China’s Crypto About-Turn
Believe it or not, China was once the de-facto capital of the Bitcoin and cryptocurrency industry. The nation, after all, spawned Bitmain and many early crypto asset investors, presumably due to the culture of risk, speculation, and technological development.
But in 2017 and 2018, Chinese authorities began to ban cryptocurrency trading, certain industry-related events, and specific online forums and websites regarding the subject matter. The why of this trend was never addressed, but Bitcoin was quickly phased out of the nation’s pop culture.
As you know, however, China recently took a serious about-turn. As reported by Blockonomi, China’s president, Xi Jinping, told the Chinese Communist Party’s Central Committee that there should be a push for the adoption of blockchain “as an important breakthrough for independent innovation of core technologies.” State-run outlet Xinhua revealed that Xi lauded the potential benefits of blockchain technologies in a swath of industries, including finance, education, health care, food security, and more.
According to Reuters, the People’s Daily newspaper, which is published by China’s ruling Communist Party, recently came out with an article calling for rationality in China regarding blockchain. “Blockchain’s future is here but we must remain rational,” the outlet wrote in an op-ed published late Monday, presumably referring to the already-rampant blockchain speculation seen in Shanghai’s financial markets.
The outlet continued, reminding its millions of readers that Xi’s statements should not be misconstrued as a sign of support for cryptocurrency:
“The rise of blockchain technology was accompanied by that of cryptocurrencies, but innovation in blockchain technology does not mean we should speculate in virtual currencies.”
People’s Daily is calling for the blockchain (and associated cryptocurrency) gravy train to slow down, yet this assertion is seemingly falling on deaf ears. Alex Krüger has observed that China’s interest in Bitcoin remains high on platforms like Weibo, WeChat, and Baidu, while analysts have indicated that China’s cryptocurrency markets have started to bubble yet again — just look to the swath of altcoins associated with the nations, as they all spiked by dozens of percent last weekend.
Chinese online interest in bitcoin (比特币) has remained high. This is good. Charts are for Weibo, Wechat and Baidu. pic.twitter.com/hg8O03ZYQX
— Alex Krüger (@krugermacro) October 29, 2019
Also, reports have arisen that a Chinese financial institution has made an investment in a cryptocurrency company.
According to Primitive Ventures founding partner Dovey Wan, China Merchant Bank has just announced an investment in BitPie, “the Bitcoin wallet with the longest history and most users in China.” Per Wan’s analysis, this is the start of the Chinese nationalization of the cryptocurrency and Bitcoin industry, which comes in response to President Xi’s remarks and the massive public response thus far.
This is likely something that is likely a no-no when taking the People’s Daily’s latest commentary into account. However, the bank has yet to withdraw its investment, maybe corroborating Wan’s opinion that China is trying to nationalize Bitcoin behind the scenes.
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