Chinese speculation triggers another surge in Bitcoin prices

According to foreign media reports, the enthusiasm of Chinese investors is once again causing a surge in the price of Bitcoin. The price of this virtual currency against the US dollar has risen by nearly 16% in the past four days, rising to $525.49 on Monday, although it is still far below the peak of $1,151 in November 2013.

Data from Blockchain.info, a provider of bitcoin wallets and block data queries, shows that the market value of all bitcoins in circulation around the world has increased by $1.2 billion since last Friday.

Despite Beijing’s ongoing efforts to restrict bitcoin trading, Chinese bitcoin exchanges continue to operate. China’s two largest bitcoin trading platforms — Huobi and OKCoin — currently account for about 92% of the world’s total bitcoin trading volume.

The sharp surge in bitcoin buying this weekend could be the latest sign that Chinese investors are rapidly shifting money between asset classes in search of higher returns. Over the past year, China's stock, bond and commodity markets have surged, then slumped as money flowed elsewhere.

The Bitcoin network is made up of traders around the world who access a virtual platform through computers and the Internet, allowing Chinese speculators to transfer funds overseas in an unobtrusive way, thereby circumventing strict capital controls.

Data from Bitcoinity.org, a Bitcoin industry tracking agency, shows that on Bitcoin trading platforms in mainland China, the current price of Bitcoin in RMB is 7.2% higher than that in USD. Bitcoin news website Cryptcoinews analyzed on Friday that the rise in Bitcoin was mainly driven by the demand in the Chinese market brought about by the recent depreciation of the RMB.