31 October 2019 17:30, UTC

After quite the surprising speech from President Xi JINPING on Thursday last week, the Chinese media has been up in arms trying to quell the bullish sentiment in the blockchain sector. As many as 100 fintech firms that are publicly traded on Chinese exchanges have shot up in valuation due to bullish speculation from investors.



The recent jump for Bitcoin is also being associated with China’s warming attitude towards blockchain. But the hurdle is that it’s the blockchain on its own, there was no indication about “legalizing” crypto trading anytime in the future. China Central Television commented on the fact saying that innovation in the blockchain technology should not echo into cryptocurrencies. A development of DLT (Distributed Ledger Technology) should not facilitate excessive speculation from investors.

According to a Reuters report, the Shanghai Stock Exchange asked listed companies that had anything to do with the blockchain technology, not to spread any misinformation about speculation and guarantee even more vicious hype. The excessive speculation seems to be dying down for now as Bitcoin remains fixated on the $9,500 price point with little indications of it jumping any further.

It’s expected that the media campaigns trying to quell the situation will continue until the CBDC (Chinese Bank Digital Currency) is officially released. Whether or not they will manage to do so is still in question. The reason is very simple. Most of the people that are now speculating on cryptocurrency exchanges are not Chinese nationals. Of course, Chinese traders also occupy a large portion of the speculative market, but combining all other nationalities we get a completely different picture.

Furthermore, it may even be a positive thing for the CCP to increase demand on cryptocurrencies as they will easily help locals diversify their crypto portfolio into the CBDC once it’s released.

One reason that the media is trying to quell the speculation though, is the possibility of diversifying these digital assets into Facebook’s Libra that’s going to come out. But considering that China will ban it the moment it’s released, it’s unlikely for the diversification to be at an alarming level.

History of speculation in China

The Chinese media is employing similar tactics as they did when local stock exchanges started to burst with speculation during the late 90s and early 2000s. The enormous wealth that started to funnel into China, ballooned most of the tech companies as well as corporations involved in commerce. It was not uncommon to see people invest their life savings into a very risky company, and either come out extremely wealthy or completely broke.

The Chinese media alongside the stock exchanges pleaded with the community to take more responsibility in their trading habits and tone the risk down a little bit. However, it wasn’t the articles published by the media that stopped speculation, but the slight correction of the markets when economic growth almost reached its peak.

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