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Is this the Reason Why China is Scared of Cryptocurrencies like Bitcoin??

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Crypto space is one of the fastest-growing technology with a rapid adoption rate over time. Now, the world has over 300 million potential crypto user base station. So, whenever things go beyond the control of China, the country has the habit of destroying them. The same thing here, China realised the fact that cryptocurrencies like Bitcoin could hit the mainstream soon.  Therefore, China may be thinking of restrict the intensifying cryptocurrencies. But the rest of the world is ripping off China by accumulating more and more to their wallet.

As per the recent report from Santiment, after Chinese game play of ban, Bitcoin and other altcoins lost their value. China’s ban has become point of discussion and its social dominance factor recorded 7.44% of all the crypto-related discussions. No later the BTC price and other altcoins started to rebound, many investors hurting Chinese sentiments utilised this opportunity for huge crypto accumulation to their wallet. 

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Why is China Scared of Cryptocurrencies?

The Crypto industry is booming as countries stepping forward to make it as a legal tender. Crypto ownership rates are at an average of 3.9% and  18,000 businesses are already accepting cryptocurrency payments all over the world. 

From 2012 to 2021, the BTC price rallied by 540,000%. With its spectacular performance in 2020, Bitcoin achieved 274% of annual growth rate. The cryptocurrency market is could grow with compound annual growth rate of 56.4% from 2019 to 2025.

Among 300 million user base, India tops the list with 100 million, followed by the US with a 27 million crypto user base. Popular analysts from the respective countries are coming up bashing China and urging countrymen to use this opportunity for bitcoin and other altcoin accumulation. 

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Moreover, crypto is slowly making its way to the rest of the industries. Close to 42 million gamers investing in cryptocurrencies. In the year 2020, the Gaming industry achieved a total market revenue of $321 million. Same the retail industries, remittance industries and many other industries have experienced significant growth.

As per the recent reports, amid growing crypto adoption,  the Indian government formulated the new cryptocurrency bill. The details in the bill included that the officials are working on categorising virtual assets on the basis of how they could used for payments or investments.

However, industry experts say China’s ban on cryptocurrencies is likely because the country wants to cut down competitors to its digital yuan, a centralised virtual coin. The coin will be governed by Chinese government. But, BTC price and other altcoins run seem to be unstoppable.  

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Wen moon? Data shows pro traders becoming more bullish on Bitcoin price

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MicroStrategy’s purchase of 7,002 BTC might have helped boost Bitcoin price today, but derivatives data also shows that pro traders are becoming more bullish.

The $4,700 Bitcoin (BTC) price spike on Nov. 29 was likely a great relief for holders, but it seems premature to call the bottom according to derivative metrics. 

This should not come as a surprise because Bitcoin price is still 15% below the $69,000 all-time high set on Nov. 10. Just 15 days later, the cryptocurrency was testing the $53,500 support after an abrupt 22% correction.

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Today’s trend reversal was possibly encouraged by MicroStrategy’s announcement that it had acquired 7,002 Bitcoin on Monday at an average price of $59,187 per coin. The listed company raised money by selling 571,001 shares between Oct. 1 and Nov. 29, raising a total of $414.4 million in cash.

More bullish news came after German stock market operator Deutsche Boerse announced the listing of the Invesco Physical Bitcoin exchange-traded note or ETN. The new product will trade under the ticker BTIC on Deutsche Boerse’s Xetra digital stock exchange.

Data shows pro traders are still neutral-to-bullish

To understand how bullish or bearish professional traders are positioned, one should analyze the futures basis rate. That indicator is also known as the futures premium, and it measures the difference between futures contracts and the current spot market at regular exchanges.

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Bitcoin’s quarterly futures are the preferred instruments of whales and arbitrage desks. Even though derivatives might seem complicated for retail traders due to their settlement date and price difference from spot markets, the most notorious benefit is the lack of a fluctuating funding rate.

Bitcoin 3-month futures basis rate. Source: Laevitas.ch
The three-month futures typically trade with a 5%–15% annualized premium, which is deemed an opportunity cost for arbitrage trading. By postponing settlement, sellers demand a higher price and this causes the price difference.

Notice the 9% bottom on Nov. 27, as Bitcoin tested the $56,500 support. Then, after Monday’s rally above $58,000, the indicator shifted back to a healthy 12%. Even with this movement, there is no sign of excitement, but none of the past few weeks could be described as a bearish period.

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Lending markets provide additional insight

Margin trading allows investors to borrow cryptocurrency to leverage their trading position, therefore increasing the returns. For example, one can buy Bitcoin by borrowing Tether (USDT), thus increasing the exposure. On the other hand, borrowing Bitcoin can only be used to short it or bet on the price decrease.

Unlike futures contracts, the balance between margin longs and shorts isn’t necessarily matched.

OKEx USDT/BTC margin lending ratio. Source: OKEx

When the margin lending ratio is high, it indicates that the market is bullish—the opposite, a low lending ratio signals that the market is bearish.

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The chart above shows that traders have been borrowing more Bitcoin recently, because the ratio decreased from 21.9 on Nov. 26 to the current 11.3. However, the data leans bullish in absolute terms because the indicator favors stablecoin borrowing by a wide margin.

Derivatives data shows zero excitement from pro traders even as Bitcoin gained 9% from the $53,400 low on Nov. 28. Unlike retail traders, these experienced whales avoid FOMO, although the margin lending indicator shows signs of excessive optimism.

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Bitcoin, Ethereum and Two Smart Contract Competitors Are the Winners Among Institutional Investors, According to Crypto Asset Manager CoinShares

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Leading digital asset manager CoinShares says institutional investors have a strong appetite for Bitcoin (BTC) and three leading smart contract platforms.

According to the firm, the overall crypto market correction has left investors hungry for more.

“Digital asset investment products saw inflows of US$306m last week suggesting [a] continued appetite for digital assets.”

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As usual, BTC led all digital assets in terms of capital inflows, this time in the wake of a new exchange-traded product (ETP) set to launch on the Deutsche Borse exchange.

“Bitcoin saw the largest inflows in 5 weeks totaling US$247m following the launch of another investment product in Europe. This brings the 11 week run of inflows to US$2.7bn.”

BTC is trading at $58,475 at time of writing, up nearly 6% on the day.

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The leading smart contract platform Ethereum (ETH) concluded a strong month of inflows with a week totaling over $23 million.

“Ethereum saw inflows totaling US$23m last week, marking its 5th consecutive week of inflows.”

This week’s big winners in inflows relative to assets under management (AuM) also include the scalable smart contract platform Solana (SOL) and the interoperable blockchain Polkadot, which is designed to support multiple layer-1 smart contract protocols.

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“In terms of inflows relative to AuM, Polkadot and Solana continue to be the winners, with inflows representing 8.6% (US$11.5m) and 5.9% (US$14.6m) of AuM respectively last week.”

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Source: CoinShares

Ethereum is currently trading at $4,453.79, up 7.5% in the last 24 hours. SOL and DOT are trading at $211.48 and $36.82, respectively, at time of writing.

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Nayib Bukele sends cryptic response to Bank of England over Bitcoin law criticism

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  • Nayib Bukele questions England love for El Salvador over Bitcoin adoption.
  • England expreses concern over El Salvador Bitcoin law.
  • Outside England IMF also criticized El Salvador over Bitcoin law.

After he expressed concerns over Bitcoin adoption in the country, El Salvador President Nayib Bukele has sent a cryptic response to the Governor of the Bank of England, Andrew Bailey.

Over the weekend, Bailey said he is not a fan of bitcoin or its growing adoption in countries like El Salvador. He expressed concerns while speaking at Cambridge University, asking if Salvadorians are aware of Bitcoin’s volatility.

“It concerns me that a country would choose it as its national currency,” Bailey said in response to a question at an appearance at the Cambridge University student union on Thursday. “What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have.”

Bank of England is not the only international body to express concerns over Bitcoin adoption by El Salvador. Since June, when the Central American country announced its Bitcoin intention, numerous global financial organizations have tried to warn the country not to do it.

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Outside the Bank of England, the IMF also criticized the move by the country.

Nayib Bukele’s cryptic, Ironic response

While addressing Bailey’s most recent comments, President Bukele responded in a tweet pointing at the “genuine” concerns that the BOE has for the people of El Salvador.

“Bank of England is “worried about El Salvador’s adoption of Bitcoin? Really?

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I guess the Bank of England’s interest in the well-being of our people is genuine. Right?

I mean, they have always cared about our people. Always.

Gotta love Bank of England,” he wrote.

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El Salvador adopted Bitcoin as its legal tender months back, and according to Nayib Bukele, there has been progress since the country made the move.

For instance, the nation has used the aforementioned volatility, especially when the price dips, to accumulate more portions of the asset and to use the profits when the price increases to make plans for buying pet hospitals or new schools.

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El Salvador adopted Bitcoin as its legal tender months back, and according to Nayib Bukele, there has been progress since the country made the move.

For instance, the nation has used the aforementioned volatility, especially when the price dips, to accumulate more portions of the asset and to use the profits when the price increases to make plans for buying pet hospitals or new schools.

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