Bitcoin price remains high, breaking through the 5,000 mark, with RMB depreciation being the biggest driver

Bitcoin is one of the best performing investments this year.

Today, the price of Bitcoin once again broke through the 5,000 yuan mark. As of press time, the highest price of Bitcoin today reached 5,058 yuan, the highest price since June 20. This year, the price of Bitcoin has seen several sharp rises. At the end of May, the price of Bitcoin rose from less than 3,000 yuan to 3,800 yuan. In mid-June, it broke through the 5,000 yuan mark, setting a new high since 2014. After breaking through 4,900 yuan on October 29, it fell back to around 4,800 yuan. Just today, the price of Bitcoin broke through 5,000 yuan and continued to rise.

The continued depreciation of the RMB is the biggest reason

Since joining the SDR on October 1, the RMB has continued to depreciate unilaterally, breaking a six-year low against the US dollar. Safe-haven assets such as the US dollar, gold, and Bitcoin have become the choice of more investors. As for the reasons for this round of increases, Huobi COO Zhu Jiawei analyzed:

"From a macro perspective, the depreciation of the RMB is the most important reason. Bitcoin has been widely recognized as a store of value asset, so it will fluctuate with the exchange rate of the national currency, and the exchange rate has a greater impact on it. From a technical perspective, after breaking through the 4360 resistance level last time, there is a lot of room for growth."

Arthur Hayes, co-founder and CEO of Bitcoin leveraged trading platform BitMEX, also mentioned in a recent interview,

It is expected that the premium of Bitcoin over the US dollar in the Chinese market is expected to further expand. If the RMB continues to depreciate, the price of Bitcoin may soar to US$1,000 in January next year.

The expectation of RMB depreciation is undoubtedly the most important reason for Chinese buyers to buy Bitcoin in large quantities. In addition, there are many other reasons for the rise in Bitcoin prices:

Affected by international events, risk aversion is high

The final result of the US election will be announced on November 8. With major events such as the Federal Reserve's interest rate hike, the Italian referendum and the UK's Brexit negotiations approaching, risk expectations are high. Many investors are looking for safe-haven investment products such as gold, and it is inevitable that some of these funds will flow into Bitcoin.

Bitcoin Core officially releases version 0.13.1, Segregated Witness will be activated

On October 28, Bitcoin Core 0.13.1 was officially released, marking the official introduction of Segregated Witness, the core of the Bitcoin Core expansion roadmap. It took a year to prepare for Segregated Witness. Once activated, this upgrade will bring many new features to the Bitcoin network and effectively increase the block size limit, which undoubtedly sends a good signal to the entire community. However, supporters of the other camp believe that the price increase that began in mid-to-late October is related to ViaBTC's public announcement of joining the Bitcoin Unlimited camp.

ViaBTC is a new mining pool established in the first half of this year. In October this year, ViaBTC publicly announced its support for Bitcoin Unlimited, and all its computing power has been switched to the Bitcoin Unlimited client. This move has sparked heated discussions in the global community. At the same time, another mining pool supporting Bitcoin Unlimited, Bitcoin.com, has also been launched. Relevant people believe that this way of expressing opinions with computing power directly promotes the expansion process, enhances community confidence, and is a direct factor in promoting the rise of coin prices in a short period of time.

Blockchain is gaining more recognition in the global financial market

The steady increase in global recognition of blockchain is also one of the reasons why the price of Bitcoin has been rising invisibly.

Let's take a look at the recent news: the South Korean government has allocated $2.65 billion to develop financial technologies such as blockchain, and South African regulators support South African banks to jointly conduct blockchain trials; China Securities Depository and Clearing Co., Ltd. (CSDC) and Russia's National Securities Depository (NSD) signed a memorandum of cooperation and will cooperate on blockchain applications in the "post-trading field" in the future; Accenture's report shows that 90% of large banks in North America and Europe are exploring blockchain payments; Visa and Mastercard credit card giants have also joined the blockchain competition; Walmart and Disney have successively launched their own blockchain plans; Huawei, Nokia and other companies have joined the Hyperledger...

Numerous large financing events also illustrate the popularity of blockchain: According to CB Insights, in the first nine months of 2016, there were 92 financing events in the digital currency and blockchain industry, with a total amount of US$492 million. Companies such as Blockstream, Ripple and Digital Asset Holdings have raised more than US$50 million in a single round of financing.

Interestingly, as the understanding of blockchain and digital currency has gradually deepened, some bank and corporate executives who previously dismissed Bitcoin have begun to take Bitcoin seriously, rather than just talking about blockchain in their speeches.

Value Return

In terms of data, according to statistics from Biqushi, which specializes in big data analysis in the digital currency industry, the number of new entrants has increased sharply since mid-October. Since late October, market indices have been bullish, and there is still no shortage of new entrants.

Sentiment index 10.23-11.1

Newcomer Index 10.23-11.1

However, judging from various social media, the community users have limited reaction to the continued high level of Bitcoin in recent days. It seems that they are no longer surprised that Bitcoin can perform so well during the global economic downturn.

Recently, Barry Silbert, CEO of Digital Currency Group DCG, predicted that in 2017, the value preservation function of Bitcoin will become the focus, and more traditional investors will begin to face up to the value of Bitcoin and include it in their investment portfolios. Of course, some people believe that due to its high volatility, Bitcoin can be used as an investment product, but it is not recommended as a means of value preservation.

But what is certain is that with the global recognition of blockchain technology and the gradual popularization of blockchain applications, Bitcoin is gradually becoming the choice of more investors. In the long run, Bitcoin will eventually return to its value.