ZB Academy:This Bitcoin rise may be mainly driven by supply tightening

The price of Bitcoin recently exceeded $18,000. Some experts believe this is due to the impact of global events and the overall bullish fundamentals of cryptocurrencies. Antoni Trenchev, co-founder and managing partner of Nexo, a cryptocurrency lender, said that several recent incidents have undoubtedly had an impact. For example, institutional investment such as MicroStrategy and Square, PayPal’s active investment in encryption technology, and the Bitcoin halving in May are all reasons why Bitcoin continues to rise.

QCP Capital, a Singapore-based trading company, believes that this time Bitcoin’s rise may be mainly driven by the supply contraction in China. Due to the force majeure faced by some well-known cryptocurrency exchanges, most Chinese miners dare not easily use cryptocurrency exchanges to sell Bitcoin. QCP pointed out on its Telegram channel that the supply squeeze has contributed to this rebound very well, and there has been no large-scale dumping of bitcoins by miners. Most of the miners choose to use cash to operate, and almost every day they sell their bitcoins to the market to pay for their mining costs. This makes miners become fixed sellers, and their actions will affect market prices. However, Chinese miners who control more than 70% of Bitcoin’s computing power and mining capacity have been facing a series of challenges, such as frozen card incidents, known or unknowable force majeure faced by well-known exchanges, etc.

Miners are full of distrust of the transaction, so they choose to wait for the right time to sell. QCP cited the blog of a Chinese cryptocurrency watcher named Wu Blockchain, who found that 74% of the miners he surveyed were facing difficulties with electricity bills. Thomas Heller, the former global business director of the mining pool F2Pool and now the COO of mining and media company HASHR8, confirmed the plight of Chinese miners earlier this week. He said that currently it is a challenge for Chinese miners to convert Bitcoin into cash. This situation, coupled with increased institutional participation and a large number of buying orders in the spot market, has caused tight supply and led to an exaggerated rise in the market.

Recently, there have been a series of trends in the encryption industry. Reuters reported yesterday that 30 Japanese companies will cooperate to develop a private digital yen, and they will develop and test a private digital currency that can be used in conjunction with cash. About 30 companies in the telecommunications, utilities, and retail industries will be piloted in 2021. The digital yen will be built on a common settlement platform and issued by banks during the trial period, and may be issued by other entities in the future. “We don’t want to create another silo-like platform. What we want to do is to create a framework that makes various platforms compatible with each other,” Hiromi Yamaoka, the chairman of the organization and a former Bank of Japan executive, told Reuters.

The organization stated that the main purpose of this move is to encourage people in this cash-rich country to use digital currencies. The Bank of Japan has also stated that they will be committed to building a national digital currency and testing it next year. In addition, Deutsche Bank said that compared with gold, investors are increasingly favoring Bitcoin as an inflation hedge, and its attractiveness as a store of value is growing. They believe that in the past, gold was often used to hedge against dollar risks, inflation and other factors, but now people prefer to use Bitcoin to achieve these functions. Because of its limited and predictable supply and usage, Bitcoin has always been regarded as a digital gold by its supporters as a means of storing value that is not affected by banks.

As of press time, according to the official market quotations of the Chinese currency, Bitcoin is currently quoted at US$17,877, a 24-hour increase of 0.75%, and a 24-hour maximum price of US$18,169.




The world’s leading cryptocurrency exchange: www.zb.com. ZB Academy is to provide prefessional blockchain insights.

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ZB Academy

ZB Academy

The world’s leading cryptocurrency exchange: www.zb.com. ZB Academy is to provide prefessional blockchain insights.

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