Bitcoin Closes in on $3,500 Mark as Altcoins Start Recovering

Bitcoin, the flagship cryptocurrency, has recently started to rise and is quickly closing in on the $3,500 mark as most altcoins are currently up in the last 24-hour period. Despite the positive performance, analysts suggest we’re still in a support area and could see it go lower.

According to CryptoCompare data, bitcoin is currently trading at about $3,480 after rising 2.8%. Despite its recent rise, BTC is still down by about 6.3% in the last two weeks. In the past 30 days, it’s lost nearly 46% of its value.

Bitcoin's price performance in the last 24-hour period

Notably, the cryptocurrency bear market that has been lasting for nearly a year now has seemingly been failing to stop adoption from growing. As CryptoGlobe covered, 1,500 restaurants in Denmark have recently restarted accepting bitcoin payments through an online food takeaway portal.

Moreover, research has shown nearly 40% of freelancers are using cryptocurrencies, as they are appealing because of the lack of intermediaries and ease of use for international transactions.

The price drop has seemingly also not affected those in the cryptocurrency space. As covered, Morgan Creek Digital recently made a “Buffett Bet 2.0,” as it bet naysayers $1 million cryptos will outperform the S&P 500 over the next decade. Some have also suggested that the best time to buy bitcoin is now, as we’re approaching a halving event in 2020.

Speaking to CyptoGlobe Mati Greenspan, senior analyst at eToro, revealed the $3,500-$3,000 zone is a considered a support for the cryptocurrency. He added, however, that it’s possible BTC will still go to $3,000, or even below it. Greenspan added:

Charting analysis only gives us last data, which can tell us which price levels are relevant to watch for. However, past performance is not an indication of future results.

The cryptocurrency’s price drop saw various miners shut down their operations as they started being unable to cope with the costs associated with them. This saw the hashrate plummet from its high in August, leading to a drop in mining difficulty. According to F2Pool founder Mao Shixing, this drop lowered some ASIC machines’ ‘shutdown price’ to $3,260.

Altcoins Start Recovering

Despite bitcoin’s growth, it isn’t the best performing cryptocurrency in the last 24-hour period. Ethereum’s ether and the XRP token are both currently up by over 2.5%, while Zcash, DASH, and NEO have all risen little over 5%.

Notably, Bitcoin Cash has risen over 8.4% in said period, and is currently trading at $106.5. BSV, which was outperforming BCH this week, has fallen 7.5% to $95.6. Privacy-centric cryptocurrency monero (XMR) has interestingly only risen 0.9%.

These positive price performances have seen the crypto market add about $4 billion.

Blockchain-Enabled Chinese Yuan Could Increase Governmental Oversight, Investor Argues

The Chinese government has been closely studying blockchain technology in order to determine whether the immutable distributed ledger can be used to streamline routine business processes.

However, Chinese authorities have expressed concerns regarding the use of cryptocurrencies in financing illicit activities and potentially disrupting the country’s $12 trillion economy by facilitating capital flight.

People’s Bank of China Considering Blockchain-Based Yuan

While China’s government has attempted to restrict transactions involving cryptocurrencies, the People’s Bank of China (PBoC) has reportedly been conducting research to determine the feasibility of launching a blockchain-based Chinese yuan (CNY) since 2014.

This, according to Dovey Wan, a founding partner at Primitive Ventures, a “market cycle agnostic” investment firm which has invested undisclosed amounts into various cryptoasset projects such as ZCash (ZEC) and DFINITY.

Wan, who earned her Masters in Information Systems from Carnegie Mellon University, wrote in a blog post published on CoinDesk on May 17, 2019 that the digital yuan, or Renminbi (RMB), initiative may potentially allow the Chinese government to exercise greater control over the nation’s local and international economy.

M0 Versus M2

As explained by Wan, digital fiat currencies allow financial institutions to more effectively create credit flows which increase M2, the broad money supply. Meanwhile, blockchain-based digital currencies impact a base currency measure, referred to as M0.

Blockchain-enabled digital currencies could potentially allow central banks to “bypass commercial banks” in order to directly control money creation and supply channels. This would structurally centralize the central financial institution’s power and role in formulating monetary policy, Wan argued.

Chinese Government Will Most Likely Use Permissioned Network

According to Wan, the PBoC is looking at various types of network design for a digital, blockchain-powered RMB. She believes that it will most likely be a permissioned network in which the nodes will be managed by major Chinese financial institutions, including the PBoC.

This indicates that transactions involving a digital yuan would only be seen by Chinese banks, and not the nation’s citizens.

Blockchain-Powered Currencies Enable “Better Coordination Paradigm”

One of the main reasons for using blockchain technology, Wan noted, is to take advantage of “a better coordination paradigm” when compared to “traditional currency supply management, which is heavily dependent on bookkeeping,” Wan wrote.

Moreover, Wan thinks blockchain’s immutable nature and private-key cryptography can prohibit users from entering fraudulent transactions and also prevent users from counterfeiting currency notes.

A blockchain-based yuan could also assist the Chinese government in more carefully monitoring the spending history of the nation's residents. This would allow the government to "accurately assess creditworthiness" and detect illegal activities such as money laundering and tax evasion, Wan noted.