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Bitcoin is Too Big for China to Kill

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.

Hence, China might have a large number of Bitcoin users but it can’t dictate the terms of use for “Bitcoineers” globally. Matej Michalko, CEO of Decent observes that “Bitcoin is a global currency, not dependent on the single economy, no matter how powerful it is. China’s willingness to put effort on Bitcoin trading should encourage other countries to adapt their legislature in favor of a more flexible approach to cryptocurrencies.”

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.


Did India and Venezuela together power the Bitcoin Bull Run?

From Mid 2016 Bitcoin has been forming higher highs and higher lows every month making the market overtly trendy. With Yuan devaluation helping the cause, Bitcoin prices were soaring high with ample opportunities for investing. The continuous rise in prices and reasonably acceptable volatility made Bitcoin one of the best performing assets of 2016.  Perceivably, majority of the people believed that China was responsible for the steady increase in prices. But was that really the case? Apart from the visible factors, there were other global drivers of adoption that helped the cause. Let’s dive into what we believe are two major factors that pulled in the volumes:

Indian Demonetization:


Prime Minister Modi sought to fight corruption, a widespread problem in India, by pulling out higher denomination bills from circulation. Considering the country’s largely unbanked population, it was a brave move. During this phase, the government tried actively to pursue a cashless society while pushing for digital wallets and transactions. Many Bitcoin startups including Unocoin, Zebay and Buyucoin have experienced a surge in their transactions owing to the policy. This has set up the stage for the growth of Fintech startups in India and has put Bitcoin into motion. The transactions from the subcontinent contributed heavily to the boost Bitcoin has received towards the fag end of 2016.

Venezuela’s inflation:


Venezuela is one country that has received a knockout blow from the economic crisis of 2008 followed by the oil slum of 2014. The once prosperous oil-rich country is now struggling to provide citizens with the most basic needs of life. The 100-bolívar note is worthless because it is worth less than $0.03 outside of the government’s pricing system. Most people have in fact started weighing the notes instead of counting them to barter for its worth. Owing to this and to introduce higher currency notes that would have value and power of purchase, government is all set to withdraw 100 bolivar notes. This transition was the opening Bitcoin needed to etch its place in the heart of Venezuela’s economy.

How Bitcoin gained:

Both demonetization in India and hyperinflation in Venezuela had a serious side effect on the population. It undermined public confidence in national currencies as store of wealth. As in the case of any hyperinflation cycle, public has resorted to holding foreign currencies that are stable. While they have an array of varied options, Gold and Bitcoin stood out as safe assets. While Gold cannot be handled with ease, owing to Bitcoins ease of use, the currency saw inflow of funds from different phases that ended up powering the bull run.


Bitcoin is Set to Displace the Bolívar in Venezuela

Bitcoin is shaping up to be the unofficial legal tender in Venezuela as the country continues to suffer the effects of hyperinflation in its currency. Venezuela has become a shadow of its former self as the once prosperous oil-rich country now struggles to provide citizens with the most basic needs of life.  The global crash in oil prices dealt a tragic blow on the country’s economy – its foreign reserves had $43B in 2009 but it has less than $11B now.

A series of ill-timed government policies such as socialist programs to redistribute wealth triggered economic chaos in Venezuela. However, the most recent economic policy that could cause Bitcoin to displace the Venezuelan Bolívar is the move to withdraw the 100-bolívar note from circulation. This article explores some of the reasons behind the trending shift towards Bitcoin in Venezuela.

Bitcoin comes to the rescue in Venezuela

The 100-bolívar was already practically worthless because it is worth less than $0.03 outside of the government’s ‘unrealistic’ pricing system. Of course, most Venezuelans don’t know what the 100-bolívar note is really worth and shopkeepers have started weighing the notes instead of counting them. Venezuelans have responded with riots and protests and the government have extended the deadline for outlawing the 100-bolívar note until January 20.

However, many Venezuelans have lost confidence in the country’s currency and many of them are starting to move their funds into Bitcoin. Bitcoin is global cryptocurrency and you don’t have to worry that its value would be eroded by the economic woes of any single country. In fact, economic woes tends to boost the price of Bitcoin in much the same way that gold tends to soar during periods of economic uncertainty.

The rushed nature of the move to outlaw the 100-bolivar note is also making people scared of holding fait currencies going forward. The Venezuelan government initially gave a 72-hour window for spending the 100-bolivar note but ATMs were mostly dispensing those same 100-bolivar notes and businesses were hesitant to accept the notes.

Hence, most people would have ended up with hundreds of thousands useless 100-bolivar notes if the window ended and they’ve not been able to replace their 100-bolivar banknotes. However, the decentralized nature of Bitcoin means that people don’t have to worry that the government will decide to outlaw the currency out of the blue.

Bitcoin will embed itself deeper into the Venezuelan economy

The Venezuelan government’s plan to remove the 100-bolívar note from circulation to be replaced with higher denominated notes reveal the level inflation in the country’s economy. In a report published recently, Steve H. Hanke and Charles Bushnell of Johns Hopkins  notes that Venezuela now has hyperinflation because it has maintained a monthly inflation rate of more than 50% for 30 days. In essence, the reality of hyperinflation in the Venezuelan economy makes its expedient to look for alternative currencies.

More so, analysts observe that the problems facing fiat currencies globally will be amplified going forward as isolationism continues in the global geopolitical landscape. Gil Luria, the director of research at Wedbush Securities notes that “the more there is an expectation for new barriers to be erected, the more there is an expectation that Bitcoin will be valuable for moving money across borders.”

Bitcoin Price Analysis: Hyperinflation to push the price higher?

Second week of October has started off with a break out propelling the market to over $620 level. The bullish trend continued with the market trading all the way to $640 before turning sideways on short term frame. The market has traded scantily over the $620-$630 region with no good residual volumes. While the long term setup still looks bullish, let’s see if hyperinflation can push the prices higher for the coming week:

Fundamental Key Points:

The adoption of the cryptocurrency and its underlying technology has always been fundamentally positive for the Bitcoin ecosystem. Here are few highlights of the past week fundamentals that might continue to have effect on the prices:

  • Bitcoin Trading on LocalBitcoins surges in Europe to all time high, turnover in Turkey and Venezuela explodes due to hyperinflation
  • Japan to drop Bitcoin sales tax by 8%
  • SEC Seeks Additional Comment on Winklevoss Bitcoin ETF
  • Polish Parliament Holds Public Consultation on Cryptocurrency
  • The Russian Government is Testing Blockchain for Document Storage
  • Bank Trials Show India’s Blockchain Interest on Rise

From a macro perspective, there has been an increase in the trading volumes of Bitcoin in countries like Venezuela that are facing hyperinflation. This is because of the devaluation of the local currency; people preferred to convert savings into Bitcoin.  Economies facing recession might opt this as a way out to save value. How SEC might react to Winklevoss’s ETF request coupled by hyperinflation effects might have impact on prices of the currency.

Technical Analysis:




Long Term Trades:

The Long Term chart has been in an uptrend from the start of this year, with no sign of any set up change currently. The market has traded constantly over $630 with very low residual volumes in the range of $620 – $630. There is a strong possibility that the market might trade again in these levels to close the gap. This might be a chance to enter into a long term position around the zone of heavy support. The previous swing low of the market at $594 can be the stop with swing high at $770.89 as the target.

To get apt entry positions for the long term trade, let’s take a closer look:


On the daily chart, in the recent period the market has been trending in a channel. Eversince market failed to penetrate the $594 price due to heavy support; it has been trending upwards with middle Bollinger as support. Taking a position at middle Bollinger around $624 with $594 as stop loss and target $770 would be an ideal long term trade that can be executed with good support.

Short Term Trades:



On a daily chart, 100 SMA has now joined the zone of heavy support around $620, with the middle bolligner, 9, 13 and 34 SMAs. Market is looking to test this region before taking to the Bull Run.

On shorter time frame (4 Hrs), the Bollinger bands have broken out and the market is bearish. All the support averages have been broken and market is moving towards 100 SMA. Good short term trades with 100 SMA as target and $640 as a stop on bearish side would be feasible. Since market could to be sideways in $620- $630 range, short term trading from both sides would be feasible for some period.

While taking long term positions, keeping an eye on macro factors would be really helpful.

Can Bitcoin be the saviour during the next Global Financial Crisis?

The housing collapse in 2008, that shadowed the global financial markets, has had gripping repercussions on the global economy.  With Greece, Venezuela and many other European countries still trapped in high recession, their economies are looking shaky and unstable. This is the consequence of the Great recession and countries are still feeling the ripples of it. As much as we don’t like it, another economic crisis is inevitable if the monetary policies aren’t very effective.

An economic crisis is a signal of how the existing monetary system has failed, which prompts for alternatives. Outside precious metals and the good old barter system, Bitcoin appears to be the best fit alternative to the existing system. Decentralized, border-less, peer-to-peer, and open-access digital currency surely seems to be a best fit in the face of calamity. Let’s look into how prepared Bitcoin is for the next Economic Crisis:

Sailing on both Tides:

An economic collapse can be of two types: Inflationary and Deflationary


Inflationary collapse or hyperinflation happens when an economy experiences very high and usually accelerating rates of inflation. This rapidly erodes the value of the local currency causing the population to minimize their holdings of local money. The population normally switches to holding relatively stable foreign currencies. Under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value. The value of economic items remains relatively stable in terms of foreign currencies.

Deflationary collapse or Deflationary spiral happens when a period of decreasing prices leads to a situation whereby the economy collapses. Deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the real value of money over time; conversely, deflation increases the real value of money – the currency of a national or regional economy. This allows one to buy more goods and services than before with the same amount of money. Economists generally believe that deflation is a problem in a modern economy because it increases the real value of debt. This may aggravate recessions and eventually lead to a deflationary spiral.

How Bitcoin would fare under both circumstances:


Inflationary collapse:


In an inflationary collapse, people would be scrambling to buy bitcoin and other solid assets such as gold. This would be in an effort to preserve their savings from the debilitating effects of inflation. But for Bitcoin to be favored over other assets, the adoption level of Bitcoin should be very high. The digital currency should evolve to a stage where it can be used for all day to day transactions. This is prevalent in countries like Argentina, Venezuela and Greece. Users are actually looking at Bitcoin as an alternate to acquire foreign currencies and goods.

Deflationary collapse:


In this case, for Bitcoin to actually be preferred as an escape option, the currency should see mainstream adoption. The central banks and lenders should be able to accept Bitcoin in exchange for debt in fiat currencies. Unless the scenario is that positive, you’d see a massive selloff of bitcoin. This is because people would want to get as much USD as possible in order to pay debts.

In a financial crisis, there are limited tools available to sovereign entities to stem the crisis. Devaluation, bail-ins and capital controls are the go-to tools, Bitcoin counters them all. Bitcoin extends the basic properties of good money with extreme, no-cost portability, security and stealth. These properties are extremely valuable in cataclysmic financial collapse. However its utility majorly depends on adoption of the cryptocurrency before the impending crisis.

Is Bitcoin the escape hatch for Venezuela?

Venezuela growing economic crisis

Bitcoin Analysis: Point of no return:

The International Monetary Fund projects that Venezuela will face a dire recession in 2016. The contraction has been 8% which surpasses the 5.7% reduction in 2015. The prediction is that the inflation will rise by 500% in 2016 and might hit 1000% in 2017. The real problem started with the installation of a Socialistic regime in 1999. Henceforth, the country hasn’t been able to produce food and other commodities sufficient for self-sustenance. On the other hand, the Government has been taking control of major companies in private sector and providing very less for the workers and population. Venezuelan government has been imposing unpopular measures to help the economy recover with disastrous results ever since. Nevertheless the situation has been deteriorating and the country is led down the spiral of Hyper-inflation.

Bitcoin as an alternative:

With the country’s economy being asphyxiated by various other factors, Bitcoin can be an escape hatch for its citizens. The devaluation of its currency, Bolivar and strict capital controls which prevent people from converting into other currencies has become the brunt of the problem. Converting the local currency into stronger currencies like US dollar, Euro or even Columbian Peso is being restricted. The status of Bitcoin is unclear in Venezuela with authorities treating Bitcoin more as property than currency. This offers more benefit than the strong fiat currencies. It can be used to purchase goods online, send and receive money and act as store of value. More businesses in the same line would also provide better employment opportunities.

Is Bitcoin the escape hatch for Venezuela? by Bitcoin_IRA on

People’s acceptance:

Venezuela has recently set a new bitcoin transaction volume record, which has seen exponential growth since the start of 2016. Bitcoin trading volume in the first week of August has reached 141,744,733 bolivars (about $141,000 USD), outperforming the previous week’s record of 117,116,539 bolivars (about $117,000).

Bitcoin Analysis Venezuela

With the country’s inflation rate sitting over 500%, people have already started to take up Bitcoin as alternative. What crucial role this cryptocurrency has to play in restructuring Venezuela’s economy is to be seen.