Bitcoin surged 13% Monday, as traders decided that last week’s melodrama over China’s attempts to crack down on the digital currency weren’t such a big deal after all.
Bitcoin Investment Trust(GBTC), an ETF tied to the movements of bitcoin, jumped 12.7% to 710.30 in the stock market today.
The currency’s value has plummeted in recent days on reports that China planned to halt bitcoin trading on domestic exchanges and had banned initial coin offerings, a form of digital-cash-based fundraising.
What’s more, JPMorgan Chase (JPM) CEO Jamie Dimon last week called the currency “a fraud,” while Mohamed El-Erian, chief economic advisor at Allianz, said that bitcoin was overvalued and that governments were unlikely to “allow the amount of adoption that is currently priced in.”
But on Monday, the sense among traders, apparently, was that China’s influence on the digital currency market might have been overstated.
Aurelien Menant, CEO of Gatecoin, a token exchange, told CNBC that traders were “realizing that it doesn’t really matter what happens in China anymore, the exchanges based there no longer dominate trading activity”.
He added that big investors in Europe, Japan and Korea were helping to drive what he said was the next bull cycle.Meanwhile, the Bank of International Settlements, in a quarterly review publication dated Sunday, suggested that central banks can no longer simply theorize about the possibilities of digital currency.
“Whether or not a central bank should provide a digital alternative to cash is most pressing in countries, such as Sweden, where cash usage is rapidly declining,” it said. “But all central banks may eventually have to decide whether issuing retail or wholesale (central bank cryptocurrencies) makes sense in their own context.”