Price analysis: Chinese President Xi Jinping loves blockchain, Bitcoin price explodes higher
China’s President Xi Jinping praised blockchain technology saying that the country should take advantage of the opportunities that blockchain offers.
The president’s speech was a part of the 18th collective study of the Political Bureau of the Central Committee that took place on October 24 in Beijing. Xi believes blockchain technology has a broad range of applications in the country, such as financial aspects, public transportation and poverty reduction.
“We must take the blockchain as an important breakthrough for independent innovation of core technologies,” Xi said. “We must clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.”
General Secretary of the Communist Party of China said that blockchain is a significant step forward and its development should be of greater importance. Xi said the technology could prove useful in many sectors including supply chains to IoT technology, and indicated that it is important for the country to keep investing and promoting blockchain. The president also added that China already holds a good position when it comes to blockchain.
He then continued by mentioning multiple benefits of blockchain technology saying it can help upgrade the current systems, improve data sharing and reduce operating expenses. Additionally, nations that utilise the blockchain technology will gain a wide range of benefits which will help them improve digital economies while promoting economic and social growth, he said.
China is currently working on its own Central Bank Digital Currency (CBDC), in the expectation of representing such growth. The country has intensified CBDC efforts following Facebook’s digital currency project Libra.
Back in 2017, the People’s Bank of China banned digital currencies, however, the central bank has been working on a digital yuan which is expected to be launched soon.
Elsewhere. Galaxy Digital Asset Management, a subsidiary of the digital assets merchant bank Galaxy Digital plans to roll out two bitcoin funds next month, said a person familiar with the matter.
The idea of the funds is to offer recognised investors low-fee, corporately administered BTC exposure, and the company plans to invest seed money into both funds. Head of the project is the ex-hedge fund manager of the investment firm Fortress Investment Group Michael Novogratz who alluded to the funds in an interview with the CNBC.
Talking about Bitcoin with CNBC, Novogratz said the currency will need new energy to make the next big leap and that positive things are happening to provide this energy such as “people setting up funds, including ourselves.”
“It’s just a Bitcoin fund that takes care of custody, it, takes care of pricing it, you know it’s got a one-week liquidity and so it just allows people to invest in Bitcoin without setting up a Coinbase account and without worrying that their phone is gonna get lost,” said the billionaire.
“We all thought if there was an ETF, more people would have access. When the gold ETF came up, the gold price really went higher. The bulk of the money in this country still resides in older people brokerage accounts but the youths who love their phones and Bitcoins don’t have the money yet,” said Novogratz, adding that it’s about providing access to that bulk of money where “fidelities live”.
The Galaxy Bitcoin Fund will demand an investment of at least $25,000 with a choice of quarterly repayments. The Fund will also enable weekly withdrawals and require minimums of over $25,000. The two funds will provide professional supervision of BTC storage, tax documentation as well as customer service support.
Technically, the price action exploded after Xi’s remarks hit the wires. In less than 48 hours, Bitcoin moved from $7393 to $10350, before eventually settling down just below the $10000 mark.
The initial move higher pushed the price above three different levels of resistance - 100 DMA, 200 DMA and the down-slipping trend line (the red line) that has connected recent swing highs in the past 4 months. Ultimately, the price action returned below the 100DMA as it was unable to facilitate a close above this level. On the other hand, the bulls were able to push the price enough to have a close above the descending trend line.
Hence, the descending trend line will now act as a strong support for the bulls. Along with the 200 DMA and the horizontal support (the blue line), they will create a strong support zone around the $9000 mark.
On the upside, the 100 DMA ($9640) is the initial target for bulls. The 61.8% Fibonacci resistance of the June - October move lower comes around the $11400 handle. After an explosive move like the one that occurred on Friday, we can expect bitcoin prices to consolidate in between these two important support and resistance levels.
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