Bitcoin prices are rebounding from a five-month low touched earlier this week.
Chinese President Xi Jinping said his country should seize opportunities afforded by blockchain, the technology that underpins bitcoin.
Despite China’s ban on cryptocurrency exchanges in 2017, the comments from the leader of the world’s second-largest economy could boost sentiment toward digital assets in general, providing a positive market backdrop for bitcoin, says eToro’s Mati Greenspan.
Bitcoin prices shot up 12 percent Friday, climbing off a five-month low touched earlier this week, after Chinese President Xi Jinping said his countrymen should “seize the opportunity” afforded by blockchain technology.
Although China’s central bank ordered mainland-based coin exchanges to close in 2017, Xi’s comments in support of enterprise blockchain, which share the distributed-ledger technology underpinning bitcoin, is good for sentiment around the crypto industry, said Mati Greenspan, senior market analyst at exchange eToro.
And that in turn could be boosting sentiment toward bitcoin, the original blockchain-based digital asset invented a decade ago, Greenspan said.
“It’s bullish for the entire crypto industry, in general, when you have the leader of one of the world’s largest economies coming to embrace blockchain technology like this,” Greenspan said in a phone interview from Tel Aviv. “Bitcoin, as we know, is a central player in the blockchain industry.”
Bitcoin jumped 12 percent in the past 24 hours, reaching $8,392 as of 16:02 UTC (12:02 p.m. New York time). Earlier this week, the cryptocurrency touched $7,363, the lowest since May 18.
Friday’s price jump-started right around 10:15 UTC, right after Xi’s favorable blockchain comments were published in Chinese media.
The Chinese president’s statements on blockchain are believed to be his first in-depth remarks on the technology. Chinese officials are developing a digital version of the country’s own currency, but have forbidden other coins from being traded.
President Xi said on Thursday:
“We must take the blockchain as an important breakthrough for independent innovation of core technologies.”
eToro’s Greenspan said that the price jump appeared to be directly correlated with the Chinese leader’s comments.
“It seems like this is what investors were reacting to,” Greenspan said. “There’s only so much amount of good news that can be ignored. Xi is one of the most important people in the world.”
Bitcoin remains well off its 2019 high of $12,920 reached in June, though prices are still more than double where they started the year.
China lion image via Shutterstock