Bitcoin price surpassed the $1,000 margin in major Chinese and South Korean Bitcoin exchanges including Huobi and Korbit on Feb. 1, after the celebration of the God of Wealth and Chinese New Year.
On Jan. 28, China and South Korea celebrated the Lunar New Year. In this time of the year, capital outflow significantly increases as Chinese and Korean people send red envelopes to relatives and friends as a cultural ceremony. Red envelopes contain cash and are usually given from the old to the young member of a family.
On every fifth day of the first month of the Chinese lunar calendar, the Chinese people also celebrates the God of Wealth, a nationwide celebration wherein families prepare to pay tribute to the God of Wealth by providing animals, cakes and fruits and launching fireworks to welcome the God of Wealth.
Bitcoin as a safe haven asset, hedge against system
Over the past few weeks, Bitcoin exchange executives and analysts including Bobby Lee, CEO of the world’s longest running Bitcoin exchange BTCC, have emphasized Bitcoin’s presence in leading economies as a safe haven asset.
Lee stated:
"Gold is sort of the hedge against the system, the status quo. Our society is ingrained with the current monetary system of fiat money, where governments issue it, they can put out as much of it as they want. Today’s money system, in a very rude way, it’s no different to airline miles or hotel reward points."
In late 2016, Bitcoin price began to increase rapidly as investors and traders began to perceive Bitcoin as an efficient long-term investment and stable safe haven asset for the first time since its introduction in 2009.
This change in viewpoint towards Bitcoin led Bitcoin price to climb all-time highs and as it skyrocketed and approached the $1,000 mark, mainstream media coverage started to hype up the digital currency.
A cycle in rising Bitcoin value
There is an evident cycle in the rising Bitcoin value. An event triggers Bitcoin price to climb and mainstream media hype sends Bitcoin to all-time highs.
In this case, Bitcoin price on the Chinese and Korean markets began to increase due to increasing capital flow and restriction of cash and financial services to supplement the Chinese yuan or the Korean won leaving the country.
It will be likely that the Bitcoin price will continue climbing if media attention continues to accelerate, as Lee explains:
“It was in the fourth quarter of 2016 when prices started getting much higher. In doing so, the higher prices attracted media attention. Forbes, Wall Street Journal, Chinese media and others produced a self-reinforcing cycle of hype. When the Bitcoin price nears an all-time high or reaches relative parity with gold prices, media attention accelerates.”