BTC surged overnight to break through the 4,500 yuan mark. Was the main driver the risk aversion sentiment?

“Crazy Bitcoin” is back.

On Saturday evening (October 22), Bitcoin, which had been relatively stable in recent times and hovered around 4,000 yuan per unit, suddenly gained momentum and broke through the 4,500 yuan mark overnight, reaching its highest point since nearly three months.

Data from Huobi.com, a domestic bitcoin trading platform, showed that yesterday's opening price of bitcoin was 4,288.31 yuan, the lowest price was 4,286.86 yuan, the highest price was 4,555.00 yuan, and the closing price was 4,496.68 yuan, with a daily fluctuation of 6.3%, breaking the highest price in three months. Today, the price of bitcoin continued to rise, and the current highest price reached 4,575 yuan. The trading volume also surged, from about 10,000 yuan at ordinary times to more than 200,000 yuan at 8 am. It seems that many investors bravely rushed into the market when the index was above 4,500 points.

A senior Bitcoin player told Niu Mei that he placed a buy order at 4,295 yuan last night and sold it at more than 4,300 yuan. "I was worried that it would drop at any time, but it rose to nearly 4,600 yuan, and I lost more than 200 points. I am crying in hiding."

Huobi COO Zhu Jiawei pointed out to Niu Mei that from a technical point of view, the overall price of Bitcoin has gradually stabilized and rebounded since the Bitfinex incident, and officially entered the standard rising channel after September 4. After several days of sideways adjustment in the early stage, the bulls have accumulated strength to explode. In this rise, the price of the currency has strongly broken through the resistance level of 4400, and rushed to 4575, approaching the 4600 yuan mark, entering a new round of adjustment and trend. Looking at the price trend of Bitcoin this year, the amplitude within 10% in one day is actually not a big news. However, since the incident of nearly 120,000 coins being stolen from Bitfinex, the largest US dollar Bitcoin trading platform, on August 3 this year, this kind of increase is still very rare. At that time, the large-scale theft of coins by Bitfinex triggered a sharp drop in the global Bitcoin price, and the decline once exceeded 25%.

He further stated that the exchange rate factor is a long-term and underlying influencing factor, which aroused Niu Mei's attention and thinking.

Since the central bank announced on October 1 that the RMB was officially included in the SDR currency basket, the USD/RMB (onshore) exchange rate has closed positive for seven consecutive days, and recently hit a new high of 6.7581 in the past six years. Regardless of how much the direct relationship between joining the SDR and the depreciation of the RMB is, at least the cumulative effect of the latter on various markets has begun to show. Zhu Jiawei told Niu Mei that at this time, investors can consider allocating some hedging and safe-haven assets, such as the US dollar, gold, and Bitcoin.

"Strong expectations of interest rate hikes in the United States have pushed the U.S. dollar index up sharply and gold prices down. Therefore, the issue of gold allocation has also posed some difficulties to investors. The Bitcoin market has performed well this year, taking off from 2,500 yuan at the beginning of the year and is now in the 4,300 yuan range. And since September, Bitcoin's safe-haven function has gradually become prominent, and its price has been rising steadily." He concluded that this is the deep-seated reason why Bitcoin's price has steadily recovered recently and surged again last night.

However, as a safe-haven asset, Bitcoin has a shortcoming compared to gold, which is its security problem. Public data shows that 95% of the collapse of Bitcoin-related startups in the past five years is related to the theft of Bitcoin. At the end of February 2014, Mt.Gox, the world's largest Bitcoin trader at the time, filed for bankruptcy, claiming that the most direct trigger was "hackers causing the loss of at least 850,000 Bitcoins." Now that the shadow of Bitfinex's stolen coins has not yet dissipated, Bitcoin has been favored by the market as a safe-haven asset, but its fundamental security issues still need to be resolved.

It is worth mentioning that on October 18, the "China Blockchain Technology and Industry Development Forum Inaugural Conference and the First Developer Conference" was held in Beijing. The forum not only released the "China Blockchain Technology and Application Development White Paper (2016)", but also carried out research on standardization needs, accelerated the formulation of Bitcoin core technology - blockchain technology and application group standards, and formulated relevant national standards in due course to guide and regulate the development of my country's blockchain technology and industry. This is undoubtedly a very positive signal.