This week we have seen endless suggestions that aim to explain why Bitcoin has embarked on a bull run recently. Whilst some of these theories are pretty wild, others do suggest that this recent bull run does show clear evidence for a causal link between the value of Bitcoin and world politics. The most prominent suggestion is that Bitcoin is spiking as a result of the falling value of FIAT currencies like the Chinese Yuan and the British Pound. In the UK, as a result of Brexit uncertainties, the Pound Sterling has stopped to new lows, almost meeting the Euro on a !:1 ratio. The Yuan has also seen a decline, amongst other uncertainties coming from inside Hong Kong.
It’s the ongoing situation in Hong Kong that many people are suggesting could be causing this bull run, so, let’s have a look why.
When things are uncertain on a political level, it affects global finance. What happens to the banks also impacts the value of our own money and our assets, therefore, we look to find new ways to store and spend out money. Bitcoin is a safe haven, one that allows us to store our assets away from the grip of banks and frankly failing cryptocurrencies. Many people believe that in Hong Kong, because of political unrest, people there do not believe their money is safe if it is stored in traditional means, therefore they are turning to Bitcoin and the blockchain to protect their money and themselves. In such political turmoil, it may be seen as wise to try and become as anonymous as possible, Bitcoin is now helping many people do just that.
So, as tensions deepen, more money pours into Bitcoin, which then pushes up it’s value, that's what the theories are suggesting here at least. Forbes have recently reported on the matter, they too believe that the situation in Hong Kong seems to be doing Bitcoin a favour:
“Initially, as protests broke out around mid-June, Bitcoin traded at about a $160 USD premium on TideBit, a Hong Kong based exchange. As protests have worn on, that premium still persists, with the latest price of Bitcoin on TideBit at $11477.34 USD, about $80 USD higher than the current rate on Coinmarketcap.”
“Bitcoin itself has seen a surge since June 9th, the largest public protest in Hong Kong's history. From about $8,000 USD, it now sits close to $11,300 USD, an increase of about 41.25%. With Bitcoin/Chinese Yuan pairs trading at a premium and the broader US-China trade war in the background, as well as a ton of other factors built in to the ambiguous mess that is Bitcoin pricing, there's not as much you can read into the tea leaves -- but it's certainly true that as protests in Hong Kong have surged, so has demand for Bitcoin and cryptocurrencies in general.”
What’s happening in Hong Kong is having a global impact, it seems that now Bitcoin is starting to make the most of that.