UPDATED 22:39 EDT / OCTOBER 27 2019

xi BLOCKCHAIN

Bitcoin surges as Chinese president backs blockchain technology

Bitcoin had a remarkable return to form over the weekend after declining over the last month into a bear market. The reason: China.

The cryptocurrency peaked as high as $10,071.47 early Saturday, up 36% in one day to its highest level in five weeks. The jump followed a  report that Chinese President Xi Jinping (pictured) announced that the Middle Kingdom is looking to lead the blockchain revolution. Xi is said to have lauded the benefits of blockchain technology in industries such as finance, education, health care and food security.

“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,” Xi is quoted as saying by Xinhuanet.

Xi noted that blockchain technology should be used to develop the digital economy including the promotion of economic and social development.

Xi didn’t mention bitcoin and cryptocurrencies in the speech, but state-run media, which is strictly controlled by the government, did, including a segment explaining how bitcoin works.

Dovey Wan, founding partner at cryptocurrency asset holding company Primitive Crypto, compiled stats from local services and found that there had been a big spike in China of people searching for information about bitcoin and blockchain.

The Middle Kingdom’s embrace of blockchain technology does not necessarily equate to embracing cryptocurrencies, however. The country has a long aversion to allowing its citizens to use them.

China banned bitcoin and cryptocurrency exchanges in 2017 and was considering banning bitcoin mining in April. The leading exchanges moved overseas following the ban and although cryptocurrencies can’t be legally purchased within China itself, that hasn’t stopped mainland Chinese from investing offshore.

Whether the China-based boost is justified or not, the fact that bitcoin has finally broken out of its bear market has investors excited.

The news out of China may have led bitcoin’s price increase, but it wasn’t the only good news during the week.

Bitcoin futures offered by Bakkt LLC, the cryptocurrency startup founded by New York Stock Exchange owner Intercontinental Exchange Inc., which bombed on debut Sept. 23, have finally started to take off.

On Friday, Bakkt Bitcoin Futures hit a daily record of 1,179 contracts traded, up from 640 two days before. The numbers aren’t huge, but the growing demand for the bitcoin futures, which unlike previous offerings are settled in bitcoin itself, is seen as a positive sign of increased institutional investor interest in the cryptocurrency.

Bakkt also plans to launch bitcoin options contracts Dec. 9. The Bakkt Bitcoin Options contract will be based on Bakkt Monthly Bitcoin Futures and is designed to hedge or gain bitcoin exposure, generate income and offer cost and capital efficiencies, according to Bakkt Chief Executive Officer Kelly Loeffler.

Bitcoin was trading at $9,738 as of 10:30 p.m. EDT, down slightly from its peak on Saturday.

Photo: Russian Government

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