Lesser-known cryptocurrency NEO surged more than 35% on Sunday. The sudden move launched the NEO price to nearly $12, even as the wider crypto market cooled off from its recent rally. Let's examine the factors behind NEO's breakneck recovery. In the wake of a historic…
In the wake of a historic cryptocurrency market resurgence, NEO has suddenly sprung to life, securing an impressive 35% single-day rally.
What’s driving that rapid upswing?
The crypto markets boomed this week, exhibiting their trademark volatility once again. In meteoric fashion, the bitcoin price jumped from a 5-month low of around $7,300 to a monthly high well above $10,000.
Much of the cryptocurrency market followed, with ethereum posting a similarly impressive 24% gain. This was further reflected by a boost of more than $50 billion to the entire cryptocurrency market cap from Wednesday to Sunday.
Since then, things have remained relatively calm. Bitcoin retreated below $10,000, and the broader market has mostly ebbed lower.
One cryptocurrency, however, is determined to keep going. NEO, refusing to give in to any correlation to bitcoin, has managed to outshine the vast majority of the market. Today, the so-called “Chinese Ethereum” has added 35% to its total value.
Without a doubt, Chinese President Xi Jinping’s vow to “seize the opportunity” of blockchain technology has much to do with the renewed sentiment within the crypto market.
On Thursday, during an address to the Political Bureau of the Central Committee, Xi praised bitcoin’s underlying technology, if not the decentralized cryptocurrency itself:
“[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.”
Many analysts have drawn a direct correlation between this pledge and the surge in crypto prices, dubbing it the “Xi Pump.”
If this narrative is accurate, then it’s only natural that NEO, a Chinese blockchain project, would have a clear advantage over many other cryptocurrencies.
Fundamental factors have added to NEO’s optimistic pivot. On Friday, NEO’s co-founders, Da Hongfei and Erik Zhang, took to Reddit for an Ask Me Anything (AMA). The vast majority of the Q&A focused on Neo 3.0 – one of the most integral upgrades to the cryptocurrency’s “smart economy.”
One particularly bullish answer came from Zhang, who noted that throughput of 20,000 transactions per second would be attained relatively quickly post-upgrade.
“I think this number should not be difficult to reach.”
Interestingly, answering a question pertaining to the threat from China’s nascent digital currency, Zhang allayed fears and did little to quell rumors of a potential collaboration (emphasis added).
“NEO is not a currency. It’s a platform. I don’t think NEO will have any conflict with the digital currency issued by the central bank of China or any other countries. From another perspective, the new cross-chain technology being developed by NEO may make it easier for various digital currencies to circulate on NEO.”
It remains to be seen whether NEO can sustain this momentum as more information about China’s involvement in blockchain becomes available.
Disclaimer: The above should not be considered trading advice from CCN
This article was edited by Josiah Wilmoth.