Bitcoin surged to its highest level in over a monthand even crossed the $10,000 mark momentarily-over the weekend, in the aftermath of praise from China for the blockchain technology that powers the cryptocurrency.
The most-traded cryptocurrency jumped from under $7,500 to as high as $10,300 on Saturday, a day after the Chinese president Xi Jinping emphasized that importance of the integrated application of blockchain technology to new technological innovation and industrial transformation in China.
Bitcoin has rebounded about 26 percent to $9,424 in the early hours of Monday, from the lowest level since June which was established last Wednesday when Facebook CEO Mark Zuckerberg defended his cryptocurrency, Libra, before United States lawmakers.
Many technology stocks on the Chinese exchange have also enjoyed gains following the announcements, although some experts say the Bitcoin rally which beat their expectations were not entirely due to Beijing’s comment.
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“Bakkt, new but popular Bitcoin futures, traded its all-time high same day in a move not really related to the announcement by China,” said Chris Ani, founder, and CEO of Digital Abundance and a cryptocurrency trader. “The rally also took place at a time we were expecting a reversal in price from $7,200.”
According to Ani, by analysis, Bitcoin had already dropped from its 2019 high of $ 14,000 to $7,000 levels where it was expected to find support and increase to around $8,000.
The cryptocurrency however surprised analysts with its largest single-day move in Bitcoin history last week, he said.
In a related event, China Merchant Bank, a Chinese bank that conducts businesses domestically and internationally, announced an investment in Bitpie, said to be the Bitcoin wallet with the longest history and most users in China.
The information which was made public Monday has been interpreted, alongside the passage of the cryptographic law by the Chinese government, to grant legitimacy to Bitcoin even though the official acknowledgment was for Blockchain technology.
Already, Li Wei, Head of the People’s Bank of China’s technology department, has encouraged commercial banks to increasingly adopt Blockchain technology, as China, where more than 60 percent of the global Bitcoin mining takes place, seeks to stay ahead of the world in technology.
“As it stands we could see anything happen in the Bitcoin market. We currently have support at $9,300 and if it is maintained we would see a breakout to $10,000” said Ani. “Otherwise price would revert to $9,000 and $8,800 levels.”
