Bitcoin +40%, why?

This week, we saw Bitcoin explode almost 40% in value in just one day. It’s the third time ever when the price of BTC increased so much in 24 hours.

What happened? Here’s a compelling narrative:

CoinDesk @coindesk

BREAKING: In his first major comments on blockchain, Chinese President Xi Jinping said the country should implement the technology across the economy, reports @wsfoxley.

ow.lyPresident Xi Says China Should ‘Seize Opportunity’ to Adopt Blockchain - CoinDeskIn his first major comments on blockchain, Chinese President Xi Jinping said the country should implement the technology across the economy.

That’s 1.4 billion people hearing about blockchain.

Although President Xi didn’t mention Bitcoin specifically, it’s still the first thing most people will think of when you say “blockchain.”

China embracing blockchain or Bitcoin won’t change anything in its fundamentals, so why did the price explode?

I guess it’s because the markets don’t care if an announcement has an actual effect in the real world. It cares about the possibility that everyone else will think this might be enough for others to buy the price up.

Alex Krüger explained it well:

Alex Krüger @krugermacro

With iliquid assets, one can't rule out price is sometimes driven by a few guys who use news as an excuse to steamroll stops, get the world talking, an maybe generate a temporarily self-sustaining move. Conspiracy theory to some, game theory to others ¯\_(ツ)_/¯

Alex Krüger @krugermacro

The more compelling the underlying narrative, the higher the odds a market move will drive others to join the trend rather than fade it => higher success odds => incentivized to allocate more funds to the trade. Simple game theory.

I have to agree with him - this is precisely how you exploit an immature market.

Although the reasons behind the explosion are questionable, I think it’s a good sign that the price of BTC has stayed over $9K.

If you’re looking to read more about it, feel free to dive into this thread (click on the tweet to see the whole thing):

Dovey Wan 🗝 🦖 @DoveyWan

Many ppl asked "How's the ACTUAL reaction on the ground to the Xi Blockchain shill in China" Here I did a quick data crunching on Wechat and Baidu search index, found it pretty interesting Thread 👇2

-Edgar