Bitcoin rallied above $6000 again on Sunday afternoon on hopes that Beijing will lift regulations that halted trade of digital currency in China. Ethereum and Litecoin also rallied—see table.
Coin Change 24H*
Bitcoin (BTC) 7.84%
Ethereum (ETH) 3.44
Litecoin (LTC) 1.07
*As of Sunday October 29, 2017 at 4.30 pm
Source: Coinranking.com
These hopes surfaced shortly after a story appeared on cointelegraph.com claiming that Chinese investors might be in a position to trade Bitcoin again in the near future.
Though the story wasn’t confirmed by any official sources, traders didn’t want to wait.
Still, the resumption of trade in Bitcoins in China won’t be a surprise.
As we wrote in a previous piece here, China's ban on Bitcoin and other cryptocurrencies that went in effect on September 30 may be temporary, to appease hardcore communist party members ahead of the upcoming 19th party convention.
China's big government and government owned and controlled banks cannot tolerate Bitcoin. It threatens their very existence.
That's in the long term, though, when Bitcoin has the potential to replace China’s currency in everyday transactions, and as a store of value.
For the time being, however, the size of the Bitcoin market is far too small to be a meaningful threat to the Beijing government and the banking system it owns and manages.
That’s why it is very likely for Beijing to lift the Bitcoin trading ban now the communist party convention is over.
Still, investors should be very cautious in buying the digital currency at these levels, as it faces another headwind: the end of easy money.