China Could Make Bitcoin Buzz Again as National Congress Looms
It could be make or break for Bitcoin in China this week with the Communist Party elections.
Having felt China’s influence before, this week it is important to keep an eye on the communist state as they gear up for their 19th National Congress of the Communist Party of China (CPC).
This form of elections essentially for the totalitarian party will see some reshuffling and power plays between top officials who either fall on the conservative side, or the progressive. In the middle is Bitcoin, and it is being used as a powerful political pawn.
Held every five years, the party congress elects the party’s top officials. It is also a forum for a showdown between the conservative forces of the party, which want to preserve the old system of central planning and state ownership and control of key industries - including banking - and the progressive forces, which want to limit government ownership and control of the economy.
"Understandably then Bitcoin is the new hammer and sickle of the progressive group while it flies in the face of the conservative traditionalists. This, many believed, is why it was banned in the first place, as a power play by the traditionalists."
Something similar seemed to happen back in 2011, at the 18th Congress, as Beijing went after a controversial Chinese corporate structure, Variable Interest Entity (VIE). This structure had allowed Chinese companies to list their shares in US exchanges through “reverse mergers.”
However, this was not successful as Chinese Internet stocks crashed soon after.
The congress begins on October 18, and its outcome could have a huge bearing on Bitcoin in the country - whether dooming it totally, or even lifting the regulatory bans.
A wild ride
When China decided to ban, firstly, ICOs, and then exchanges, there was a tangible drop in price that was felt across the world. This sent the digital currency skidding from $5,100 down to close to $3,100.
However, the Bitcoin price has recovered, and in fact reached new all time highs.
At the same time, the ride may not be over, for even though the ban was touted as temporary, if the conservatives get the upper hand in the convention there could be more violent volatility to be faced.