Bitcoin soared almost 40% over the weekend, one of its biggest daily rises in history and a massive surge given the recent break of technical support levels.
While many had ideas on the catalysts for the move, it appears the biggest driver came from China’s President Xi Jinping confirmed Facebook CEO Mark Zuckerberg’s big warnings to Congress last week, calling for China to accelerate its adoption of blockchain technologies as a core for innovation.
Blockchain adoption promotes innovation
Xi stressed that the implementation of integrated blockchain technologies is key in promoting technological innovation and transforming industries. He told the committee:
“We must take blockchain as an important breakthrough for independent innovation of core technologies, clarify the main directions, increase investment, focus on a number of key technologies, and accelerate the development of blockchain and industrial innovation.”
But, it’s Blockchain, not Bitcoin
Xi’s push for greater blockchain adoption comes against the backdrop of China’s long-standing aversion to – and a crackdown on — cryptocurrencies. Authorities in the country first banned ICOs in 2017, quickly followed by cryptocurrency exchanges.
There have even been reports that at least one government agency is considering a ban on cryptocurrency mining.
Digital currency arms race
Unsurprisingly, the one cryptocurrency that the Chinese government doesn’t seem to have an issue with is its proposed central bank digital currency (CBDC). Despite reports throughout the summer that the launch of this was imminent, officials from China’s Central Bank last month said that there was no timetable for the launch of the CBDC.
Xi’s commitment sparked a surge in China tech stocks – the biggest jump since February…
“Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype,” said Li Shiyu, fund manager at Guangdong Xiaoyu Investment Management Co.
“It shows how much excitement can be triggered by something stressed as a priority by the top man himself.”
Meanwhile, Facebook’s Mark Zuckerberg has been referencing the threat of Chinese superiority in the digital currency space in an attempt to sell U.S. lawmakers his plans for the Libra stablecoin.
“China is moving quickly to launch a similar idea in the coming months. We can’t sit here and assume that because America is today the leader that it will always get to be the leader if we don’t innovate,” he argued in an official statement.