Global risk aversion heats up, Bitcoin price stops falling and rises sharply

The impact of Brexit on the global financial market continues to ferment. The prices of the British pound and the Chinese yuan fell, while the prices of the US dollar and the Japanese yen rose. Bitcoin, which "recovered" in June , performed well on June 24 , the day of Brexit, with the price of Bitcoin soaring to 4,430 yuan; the increase since June exceeded 50% .

The result of the UK referendum, which decided to leave the EU, caused a shock in the international market on that day and in the following days. As the risk aversion sentiment in the international market heated up, funds flowed into gold, US dollars, Japanese yen, etc., looking for an outlet. Bitcoin is known as "electronic gold" in the industry, and it has also become a risk hedging option for international funds after the UK referendum decided to leave the EU.

On June 23 , as public opinion was leaning towards staying in the EU, Bitcoin plummeted 14.24% to close at 3,665.24 yuan. The next day, the situation took a big turn, and the UK voted to leave the EU. The price of Bitcoin also rose 15.34% from the previous day , and finally closed at 4,227.51 yuan. Two days after the UK left the EU, the price of Bitcoin rose 25% .

"The maturity of blockchain core technology is also one of the core reasons for this round of Bitcoin price increase." Zhang Hongbo, Secretary-General of Shenzhen Cloud Computing Industry Association, told a Securities Times reporter.

Industry insiders pointed out that blockchain technology, as the underlying technology of Bitcoin, is a distributed database and ledger recording technology that is almost impossible to change. This technology is a decentralized and tamper-proof, trustworthy database that records the order of transactions while ensuring data security. Therefore, blockchain technology essentially solves the trust issue in human society.

At the first Big Data Finance Forum held on June 24 , Sheng Songcheng, director of the Survey and Statistics Department of the People's Bank of China , said that the central bank's digital currency is different from the existing electronic form of the standard currency. It may be based on blockchain technology and realize "point-to-point" payment and settlement without the help of a third-party centralized institution. It can also track the flow of funds and collect transaction data to improve capital liquidity.

Guotai Junan Securities analyzed that the central bank's statement shows that the central bank has a relatively objective and profound understanding of blockchain technology, and affirmed the great superiority of blockchain technology over existing electronic currencies. The market was previously worried that blockchain technology would not be recognized by regulatory authorities and promotion would be hindered. This statement will dispel this concern, and the recognition of blockchain in the capital market is expected to further increase.

Another reason for the current round of bitcoin price increases is that the window for bitcoin production to be halved on July 9 is approaching. Bitcoin production is fixed, and it has a limit of "supply halving every four years".

At present, the 415,000th Bitcoin block has been mined, which means there are less than 5,000 blocks left before the Bitcoin production is halved. According to the Bitcoin open source software protocol, the Bitcoin block reward will be halved every 210,000 blocks, and the "scarcity makes things more valuable" caused by the halving of production has broken the previous supply and demand balance and triggered market panic about supply tightening.