After Chinese President Xi Jinping’s endorsement of blockchain technology last week, the crypto markets rallied spectacularly.
Bitcoin made colossal gains of as much as 42% in a few hours – its highest intraday gain since 2011.
Xi Jinping called blockchain essential for driving innovation and pledged to finance more projects. Today, that enthusiasm has spilt over into the stock markets.
Chinese blockchain A-share firms max out
On Monday, stocks in Chinese blockchain A-share firms maxed out at their 10% limit. Co-founder of crypto investment holding firm Primitive Ventures Dovey Wan tweeted out:
as expected, almost ALL (over 100) Blockchain-related Chinese A-shares hit the daily upper limit (10% intraday gain)
New money in China will first hit the stock to follow on the Xi/Blockchain news, and later ______ pic.twitter.com/sC5IZgAojo
— Dovey 以德服人 Wan 🗝 🦖 (@DoveyWan) October 28, 2019
This massive influx of capital into blockchain comes after the technology was endorsed by China’s most influential figure. Last week, he spoke out in favour of the new technology, calling it a breakthrough.
“We must take blockchain as an important breakthrough for independent innovation of core technologies, clarify the main directions, increase investment, focus on a number of key technologies, and accelerate the development of blockchain and industrial innovation.”
The crypto markets subsequently spiked, seemingly sparked by the fact that China is officially all-in on blockchain technology.
Although, as several people have pointed out, Xi was quick to say “blockchain” and not “Bitcoin”. The likes of Coinmetrics.io co-founder Nic Carter even downplayed the news, asking:
So just because xi jinping said “blockchain” were all gonna pretend that it means something?
— nic carter (@nic__carter) October 25, 2019
Moreover, it’s far more likely that he was talking about centralised blockchains to track movements further rather than offer citizens economic freedom or self-sovereignty. As economist, trader, and influencer in the space Alex Kruger pointed out:
Assume China's president has private blockchains in mind. Blockchain, not crypto. Control and surveillance, not freedom and privacy. https://t.co/Az6haBQAd9
— Alex Krüger (@krugermacro) October 25, 2019
Chinese banks to increase usage of blockchain for finance
Beyond the explosion in the stock market, the head of technology at the People’s Bank of China (PBoC) is also getting in on the game. He has urged Chinese banks to step up their use of blockchain for digital finance, according to a Reuters report today.
It appears as if interest in the technology is catching on everywhere. According to data from WeChat, the search volume for both blockchain and Bitcoin has spiked. Two days ago, the number of searches for “blockchain” was at 777,000. After the Xi Jinping endorsement, they reached a massive 9.2 million.
WeChat searches (10/23/19):
– 区块链 (Blockchain): 777K
– 比特币 (Bitcoin): 572K
WeChat searches (10/25/19):
– 区块链 (Blockchain): 9.2MM
– 比特币 (Bitcoin): 1.3MM
— Cole Kennelly ⬙ 🦄 (@ColeGotTweets) October 27, 2019
Both Chinese blockchain projects NEO and Tron made staggering gains as well. NEO skyrocketed by 45% while Tron gained almost 25% on the news.
Binance CEO says the exchange will ‘scale up’ operations
Upon the news of the blockchain stocks maxing out, Binance CEO Changpeng Zhao (CZ) confirmed that the crypto exchange will be scaling up and is waiting for the “gains in the stock markets” to “spill over to crypto”.
Those gains in stock markets will spill over to crypto soon… Told ours guys to scale up system capacity, waiting. https://t.co/8S0LhCXoV3
— CZ Binance (@cz_binance) October 28, 2019
The timing couldn’t have come better for Facebook’s chief Mark Zuckerberg as well. Standing in front of an antagonistic and at times bloodthirsty US Congress, he claimed regulators should push Libra forward or else China would steam ahead.
“While we debate these issues, the rest of the world isn’t waiting. China is moving quickly to launch similar ideas in the coming months. If America doesn’t innovate, our financial leadership is not guaranteed.”
It seems as if President Xi Jinping was listening.