On May 31, one the biggest Bitcoin exchanges in China by OKCoin is back on track helping to improve the Chinese exchange market after the suspension of withdrawal transactions.
As a result, more Bitcoin investors are resuming their interest and driving up the demand for Bitcoin. Thanks to the resumption of withdrawals, Bitcoin is now traded at a premium rate in China compared to last year. Also, mainstream Chinese media coverage that shows Bitcoin as digital gold in the country increases Bitcoin demand for local traders.
The recent global average Bitcoin price is at $2,300.
On Friday, traders were trading Bitcoin at more than $2,340 in the Bitcoin exchange market in China. In fact, this is almost $50 higher than the US rate. Though it’s not as high as the South Korean premium rate of $400, the recent development in China’s Bitcoin exchange market is certainly a great sign of recovery and growth for the international market.
Several important factors caused Bitcoin price to continue surging this year. Among these factors that drive the price increase are the legalization of cryptocurrency approved by the Japanese government, adoption of new Bitcoin scaling as supported by the primary parties involved in the Bitcoin community, and the use of initial coin offering or ICO in raising funds.
Experts believe that the increasing demand in the Asian region pushes the recent growth in the currency. Moreover, Bitcoin expert Garrick Hileman of Cambridge Center for Alternative Finance, found out that users are ‘curious’ about how Bitcoin works when it comes to sale and purchase. And while more and more people are getting more interested in Bitcoin, the market is becoming more positive towards it.
At first, Bitcoin was known only within the US but it spread out across the globe since 2013. Asia is now a new market for Bitcoin as demand in this region is getting higher.
In fact, in Asian countries like South Korea, Bitcoin price soars up to $3,100 which is much higher than the US dollar price of $2,400. It’s the same case with Japanese yen where the average price is equivalent to almost $300 higher than the US sustaining the momentum for Bitcoin’s demand in Asia.
On the other hand, the Bitcoin exchange head Adam White says that in the flying Bitcoin market, traders can’t just purchase in one market and sell it to another until the price increase. For instance, in South Korea, traders met logistical and regulatory hindrances when it comes to US dollar to Korean won conversion that stop them from hitting the Bitcoin’s increasing demand.
As far money transfer is concerned in the international scale, Bitcoin is taking the lead.
Different startups are giving much favor to Bitcoin in sending remittances since it works faster than traditional money transfer networks.
Let’s take Bluepan, a South Korean company as an example. The company serves to send money from overseas workers in East Asian countries like South Korea and Japan to their families in China and the Philippines.
For more than two years, Bluepan has processed payments worth $65 mln and for the past 18 months, they recorded a five time increase in the value and number of transactions. According to Bitcoin analyst, Chris Burniske, Bitcoin helps remittance companies to gain 10 to 20 percent growth every month.
In the same aforementioned report by Garrick Hileman, it was highlighted that the Asian region is the largest market in remittance industry.
Moreover, his report analyzes the number of customers that these companies have according to different regions in the world and different business types that use Bitcoin. The study shows how Asia is well represented in different types of Bitcoin businesses.
Dollar and Bitcoin
While Asia dominates the Bitcoin businesses and industries, it’s a different story for North America. In fact, in the same report, the region only shares a small portion of all customers in any categories. There is also less number of customers from North America who are using money transfer services.
To understand this low involvement of the region to remittance business, we need to take into account that the global financial system is primarily based on the US dollar. This means that remittance transactions are easier between dollars and non-dollar currencies compared with transactions that involve two non-dollar currencies.
Thus, companies that provide Bitcoin-based services are having a hard time competing with traditional remittance services in the US.