Bitcoin investors have had it rough in the last couple of weeks after the cryptocurrency crashed from its near all-time highs. The main reason behind the decline in the price of Bitcoin was rising apprehension that China might move to halt the demand for Bitcoin it its economy. China is one of the markets where Bitcoin enjoys a broad-based early adoption, but the government’s recent effort to tackle money laundering and capital outflows makes the outlook for Bitcoin gloomy in the country.
Interestingly, many investors didn’t wait to examine the fundamental reasons supporting the rally in Bitcoin and they rushed for the exits at the first sign of trouble from China. However, China might be one of Bitcoin’s biggest markets but it is not Bitcoin’s only market. This article explores some of the reasons Bitcoin’s global broad-based demand won’t be eroded just because China wants to regulate the cryptocurrency.
Bitcoin’s adoption and growth is not dependent on China
China is a big market for Bitcoin and it has dominance in the volume of Bitcoin mining activities within its borders. However, many investors are erroneously mistaking the volume of Bitcoin trade in China for its leadership in Bitcoin’s global total addressable market share. However, the fact remains that at the core of Bitcoin’s decentralized philosophy is an intentional move to ensure that no single country is able to control the value of Bitcoin.
India and Venezuela are some of the populous economies with a growing demand for the use of Bitcoin. Hence, even if China decides to close down all the Bitcoin exchanges in the country, the move could have short-term effects in reducing the value of Bitcoin but the move won’t be enough to shut down the value proposition that Bitcoin already has globally.
China’s current efforts might push for a wider adoption of Bitcoin
In the first few days of 2017, Bitcoin was trading around $1,134 before China made some moves that triggered a decline last week – Bitcoin now trades around $829. Critics of Bitcoin might want to gloat over the marked decline in the value of the cryptocurrency. However, the fact remains that the decline might turn out to be a blessing in disguise in fuelling the increase adoption of Bitcoin in the global markets.
To start with, investors often love to “buy low” and “sell high”; hence, the $1,034 trading price of Bitcoin at the start of the year priced out many potential investors from the market. However, Bitcoin seems to have found support around the $800 mark in the last couple of days; hence, it shouldn’t fall lower unless there’s another cataclysmal event in the news. In essence, many more investors would be willing to buy Bitcoin now that its price is manageable around $800 in anticipation of booking gains in the next rally in the cryptocurrency.