Chinese President Xi may have dramatically increased chances of success for new, western, blockchain-based digital currencies
Market data today, at about noon; check prices; markets are moving fast today
Today’s big news:
By far the most important news today in the crypto- digital- currency markets are that values are all up about 10% in the last 2-3 hours. The price action seems to be driven by press reports in China that Chinese Premier Xi spoke today at a top communist party about developing blockchain technology:
We believe the news out of China today is INDIRECTLY beneficial to already-functioning crypto-currency markets.
Earlier this week, values of BTC and other digital-currencies were DOWN substantially because US congressmembers pressed Mark Zuckerberg on Libra, the digital currency originally devised at Facebook. Some of the questioners at the testimony were particularly acrimonious.
Before that, digital currency values had fallen because some of Libra’s other would-be founding participant companies dropped out of the consortium due to pressure from regulators and legislators. Major companies which had dropped out from the Libra consortium included Visa, Mastercard and PayPal.
Interesting for today, though, is that part of Zuckerberg’s strongest testimony in Congress this week included his assertion that Congress and regulators needed to act quickly so that the US didn’t lose ground to China’s developing other, different blockchain protocols.
This rationale is similar to what drove the US-Soviet space race. Readers are encouraged to watch the movie “Hidden Figures” for a good overview of why the space race mattered. Getting a man to the moon was to win popular support but the real competition was for who would set the rules for what orbiting space craft would be allowed to do once they got into orbit. In the same way Spain and Portugal largely wrote the rules for other Europeans to follow in their conquests of the 15th-19th centuries, the US wanted to be able to set the rules for what was permissible in space.
Similarly, Zuckerberg is making the argument now that if the US doesn’t want to cede control of blockchain to the Chinese, then the US had better act quickly to develop whatever legislation and regulatory regime it deems necessary so that companies like Facebook and others who want to invest in ventures like Libra can do so quickly. It’s all about “western” companies’ being able to create the protocols for blockchain and also so that The West can write the rules.
We believe the Chinese premier just dramatically increased the chances of Libra’s (or similar entities’) success.
We believe that is what some market participants also believe and is what MAY be causing such a sharp increase in market prices for traditional crypto currencies today.
As always, if you have any questions, please direct them to iTrust Capital’s Blake Skadron. Any unanswered questions will quickly be addressed by iTrust Capital’s Economics Team.
Tim Shaler is Chief Economist of iTrust Capital. He is a published Real Estate economist, was a portfolio manager and asset allocation expert at his previous firms and is an adjunct professor at Webster University. His MBA (Finance) and MA in Russian Economic History are both from the University of Chicago.
For all media inquiries, please contact Blake Skadron at firstname.lastname@example.org.