How two countries helped drive the recent rise in cryptocurrency prices

Digital currency prices have soared recently, with reports from the past few months showing enormous valuation increases for currencies across the board.

Bitcoin, Ripple, and Ethereum have all experienced exponential growth, with Bitcoin prices rising to $2,588, Ripple reaching a market cap of nearly $10 billion, and Ethereum growing to a total market cap of over $20 billion.

With supply and demand for digital currencies extremely high in both Japan and China, it is no surprise as to why these two countries are helping to fuel the rise in cryptocurrency prices.

Ability to Withdraw in China?

With access to cheap hardware and electricity, China is the prime breeding ground for mining cryptocurencies, with huge mining pools run by exchanges such as BTCC accounting for more than 60% of the bitcoin network’s collective hashrate.

However, the beginning of 2017 saw a governmental crackdown of Chinese-based digital currency exchanges, causing a suspension in all withdrawals, causing the market to suffer heavily with China being one of the top bitcoin markets in terms of trading volume.

Recently, Caixin reported potential changes in the governmental regulatory framework to allow withdrawals last month, specifically mentioning top exchanges OKcoin, Huobi, and BTCC. This potential good news has increased consumer confidence in cryptocurrencies, contributing to their associated rise in value.

Japan: Stepping in to Fill the Chinese Void

With cryptocurrency liquidity in China experienced stagnation earlier this year, the Japanese bitcoin market exploded, with demand reaching new heights.

Previously, Japan represented barely 1% of total bitcoin trading volume, but in recent months estimates put this number as high as 6%, with Japan accounting for nearly 55% of total trade volume on some trading days. This increase in JPY bitcoin trading due to the Chinese inability to liquidate has fueled growth in the digital currency market globally.

Solid Alternative Compared to Government Policy

In China, the tightly-controlled yuan is another reason why cryptocurrency prices have experienced their unprecedented rise in value. The Chinese government has total control over the yuan’s valuation, traditionally devaluing the yuan to give itself an international trade advantage when the government saw fit.

With the growing amount of private independent wealth in China, cryptocurrency has become viable as an alternative asset class. And cryptocurrencies are being seen as more accessible, less volatile, and increasingly stable, contributing to their recent growth in value.

Meanwhile, the Bank of Japan’s policy of quantitative easing has resulted in very low, and sometimes even negative interest rates, also caused digital currency values to rise.

The Japanese government’s QE policy, intended to spur economic growth, has resulted in significant deflation for the yen, causing a similar decrease in investor confidence in this currency. With no end in sight for this form of Japanese monetary policy, digital currencies have and are currently being used as an alternative asset class, driving their rise in value.

Virtual currencies are quickly being seen as a better asset class by local investors, who fear the volatility of government interference in their specific economies.

Institutional Acceptance of Digital Currency

The rise in digital currency values can also be attributed to institutional acceptance of cryptocurrencies. The recent conclusion of the Global Blockchain Financial Summit in Hangzhou saw intense interest from reputable institutions like Peking University, which is creating an Ethereum center to work on direct application use and protocol improvements in China.

The Royal Chinese Mint, a downtrace unit of the People’s Bank of China (PBoC) dedicated to its electronic banking mission, has even actively promoted the application of blockchain technology,