On Friday, China’s leader, President Xi Jinping, absolutely floored the cryptocurrency and blockchain industry.
Speaking at a meeting of the Political Bureau of the Chinese Communist Party’s Central Committee, Xi called for the adoption of blockchain “as an important breakthrough for independent innovation of core technologies.”
State-run outlet Xinhua revealed that Xi lauded the potential benefits of blockchain technologies in a swath of industries, including finance, education, health care, food security, and more.
Although Xi has discussed the matter of blockchain previously — he called it a technology that allows for “breakthrough applications” in mid-2018 — this was the seeming first time that the president discussed the matter in a serious political context rather than a university lecture.
These statements may seem rather bland — they seem like something any world leader would say in regards to a fledgling, budding technological class — but the Chinese president’s statements will have and already have had a massive effect on the region’s understanding of the technology.
China Gone Blockchain
If Donald Trump lauded blockchain, it would be a big deal. But, it purportedly isn’t a big deal as President Xi endorsing the technology. Since his statement on Friday, corporations, media, and individuals all across China have sprung into action, trying to do everything in their power to get started on adopting and developing blockchain applications.
As Eric Thies, a popular crypto analyst, wrote on Twitter, “1.5 billion Chinese were just told to build blockchain as a core component to their future innovation,” clearly referencing the absolute magnitude of this news’ effect on the future of blockchain.
Let’s lay this out for everyone since nobody here apparently gives a damn.
1.5 BILLION Chinese were just told to build blockchain as a core component to their future innovation.
So naturally, CryptoTwitter is debating how bearish the resulting daily candle was. 🤷🏻♂️
— Eric Thies 📈 (@KingThies) October 27, 2019
Indeed, Su Zhu of Three Arrows Capital said that this news will have a profound effect on this nascent industry:
“[More than] one billion people will see this news. Search volumes and web traffic will balloon. […] Parents will be urging kids to learn crypto and blockchain.”
What’s crazy is that the push for the mainstream adoption of blockchain in China has already begun, despite it being just a few days since Xi’s bombshell remarks. According to reports on Twitter, China’s top state-run media outlets, both video and digital print, have all mentioned blockchain (and even Bitcoin in some instances) in their latest iterations, bringing this technology to literally hundreds of millions.
Due to the potential economic and social benefits that China could see through the adoption of blockchain, it is likely that the U.S. and its ilk will soon follow. Considering the pushback seen with Libra, however, it may be a little longer before our Western readers see blockchain usage appear in your day-to-day.
Didn’t Affect Bitcoin
While President Xi’s statements have already done wonders for the adoption of blockchain in China, it is important to note that likely isn’t what is behind Bitcoin’s recent surge “to the moon.”
Speaking to cryptocurrency television outlet BlockTV in a recent interview, Dovey Wan, a cryptocurrency venture capitalist known for offering immense insight into China, stated that her hypothesis is that it is western traders that drove “the majority of the Bitcoin price rally” from $7,300 to $10,600. She added that western traders overreacted to this news.
Backing her sentiment, Wan later remarked that Tether’s USDT has seen no premium on OTC markets in China, the price didn’t move immediately after the release of Xinhua’s aforementioned article, the price pumped as the U.S. woke up and shared President Xi Jinping’s statements, and the Bitcoin buying volume was not centralized on Huobi or OkEX.
Alex Krüger pointed out a statistic that may corroborate Wan’s analysis. The macroeconomy and crypto researcher noted that on Baidu — China’s equivalent of Google — searches for the Chinese equivalent of the term “blockchain” exploded and hit an all-time high as the trend for “Bitcoin” moved higher, but only marginally.
Interest in Bitcoin in China has barely edged up. Chart shows Baidu searches for Bitcoin (blue) vs Blockchain (red). Looks very conclusive to me, particularly so given the price spike. pic.twitter.com/UGwU5416jO
— Alex Krüger (@krugermacro) October 26, 2019
Yet, China-related cryptocurrency and blockchain assets have fared rather well. Below is a screenshot from Sunday, which shows that altcoins with close ties to Chinese developers and the like have absolutely boomed off this news. Preliminary reports are also showing that publicly-listed Chinese companies with any remote ties to “blockchain” have all surged by 10%, a rally that triggers market breakers to prevent further trading.