China, bitcoin
A former massive trading market could be the reason behind bitcoin’s latest rally. | Source: Shutterstock

By CCN Markets: Over the past three months, the bitcoin price has risen from $3,911 to $8,120 against the U.S. dollar on major crypto exchanges, demonstrating strong momentum supplemented with a clear rise in volume.

The bitcoin price is up nearly three-fold in the past three months
The bitcoin price is up nearly two-fold in the past three months (source: coinmarketcap.com)

In recent weeks, the interest towards bitcoin on Baidu, the most widely utilized search engine in China, spiked significantly to 2018 levels, which could potentially indicate an increase in the demand for the asset by retail investors.

Tether volume similarly indicates a rise in interest towards bitcoin

In China, it is not illegal to own or store bitcoin as said by the Bank of China’s Law Research Association council member Sa Xiao.

According to CnLedger, a recognized crypto news source based in China:

‘It is legal to own bitcoins in China’ says Sa Xiao, Council Member at Bank of China Law Research Association, cited by The Beijing News. Besides, Xiao considers the occasional exchange of bitcoins between individuals and individuals is legal.

While trading bitcoin and other crypto exchanges remains prohibited and the government has taken various measures to restrict trading, local reports have suggested that individuals are circumventing restrictions to trade at over-the-counter (OTC) exchanges or international exchanges using Tether.

As the trade conflict between the U.S. and China intensified with the imposition of additional tariffs and the retaliation of both countries, the interest towards bitcoin in China has started to surge.

However, global markets analyst Alex Krüger noted that it is possible the increase in the interest in bitcoin and the fallout of trade talks is simply coincidental.

He said:

There’s been a lot of talk about how China has been the driver behind Bitcoin’s move up since the first week of May. So I decided to look into bitcoin Baidu trends (China’s Google). China’s bitcoin popularity has definitively been on the rise.

Interest in BTC only coincided with the Trade War and Yuan since the 6K breakout. The Trade War was long underway by then, with various peak interest prior episodes. It’s possible the BTC – Trade War narrative was driven by media and resulted in a self-fulfilling prophecy.

Earlier this month, Diar, a weekly institutional publication and a curated data platform focusing on the crypto market, reported that on-chain transactions on the Tether blockchain protocol spiked in China in the second quarter of 2019.

From April to June, China accounted for 62 percent of transactions on the Tether blockchain, dwarfing volume from other regions.

“On-chain data shows Tether movements hitting a new all-time-high for 2Q19 with one month left on the calendar for the period. What is most striking, however, is the volume coming in and out of Chinese exchanges dwarfs western and global trading venues and accounts for more than half of the total transaction value of known parties,” the Diar report read.

Not the main factor but could be a key catalyst

Considering that 95 percent of the volume in the global crypto exchange market is acknowledged to be inflated or manufactured, verifiable volume from the futures market and regulated exchanges account for the overwhelming majority of the volume of the dominant cryptocurrency.

It would be far-fetching to state that China is the main factor behind the current momentum of the crypto market but data suggests that it may be one of the several catalysts fueling the upside movement of bitcoin.

This article was edited by Samburaj Das.

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