Yesterday Bitcoin broke the $500 mark and is now trading around $525. There’s no doubt this time what caused the price spike. It was Chinese people. This is clearly indicated by the huge spread between Chinese markets and western ones (about $70).
But, why are Chinese buying bitcoins?
- fear of a devaluing yuan
- government implementation of capital controls
Chinese rich people put their money in foreign real estate, sending Canadian real estate prices ballistic, for example.
But it now appears than even median income people (who cannot access the fancy banking services needed to purchase million-dollar real estate abroad) have found the their cheap way around government regulation and intervention.
This is living proof of what we were saying in previous posts: the growing government intervention and manipulation of the economy is one of the huge tailwinds that will push Bitcoin to new heights.
And it is not speculation: this is exactly the value the digital currency have to offer to the market: the ability to escape the banking sector and to store value outside fiat currency systems, therefore allowing people to safeguard their money from government driven devaluation.
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