Earlier this morning, on May 24, bitcoin’s price established its new all-time high at $2,322 based on global average. Although analysts have attributed the recent bitcoin price surge to the strong performance and momentum of the Japanese bitcoin industry, it is quite evident that progress in bitcoin scaling talks has been a driving factor of bitcoin price’s upward momentum.
Yesterday, at Consensus 2017, Barry Silbert-led Digital Currency Group officially announced the agreement established among the bitcoin industry and mining community. In a statement, Digital Currency Group revealed that 56 companies representing 83.3 percent of hashing power and 5.1 billion monthly on-chain transaction volume have come to a consensus to activate the Bitcoin Core development team’s Segregated Witness (Segwit) at a 80 percent activation threshold and execute a 2MB hard fork six months thereafter to proportionally scale the Bitcoin network.
Upon the announcement of the newly agreed upon Bitcoin Scaling Agreement, bitcoin price surged by around $185, from $2,100 to $2,285, demonstrating a 9 percent daily increase in value.
Although the Bitcoin Core development team including developers Matt Corallo and Greg Maxwell have criticized the Bitcoin Scaling Agreement due to its highly unrealistic timeframe and deadline, Corallo in particular expressed his enthusiasm toward the industry and mining community trying to come to a consensus to make progress in scaling.
“While I appreciate the sentiment (and I am totally supportive of the stated goals, assuming, of course, there is consensus among the community of Bitcoin users to move forward on this, which I think is possible), the fact that specific technical details are committed to in the proposal resulted only further delaying any scaling solutions being deployed in Bitcoin, instead of moving us forward, as I had hoped from the work put in there,” said Corallo.
The optimistic and enthusiastic beliefs of the bitcoin development and mining communities, as well as the bitcoin industry, led traders and investors to anticipate the execution and implementation of a scaling solution that will be able to address bitcoin’s explosive growth in terms of user base and daily transaction volumes. Such anticipation led to a drastic increase in demand for bitcoin, specifically in Asian bitcoin exchange markets including China, Japan and South Korea.
More importantly, while the comeback of the Chinese bitcoin exchange market hasn’t been discussed by analysts, it is crucial to note as it replaced the Japanese bitcoin exchange market, which remained the largest bitcoin exchange market until last week, with a market share of 19.4 percent.
The only possible explanation that could accurately describe the comeback of the Chinese exchange market is that its local investors and traders were trading on Japanese bitcoin exchanges while Chinese exchanges suspended withdrawals and tightened anti-money laundering (AML) and Know Your Customer (KYC) policies by the request of Chinese regulators.
China makes a strong comeback, now second largest #bitcoin exchange market above Japan. Likely that Chinese investors were trading in Japan. pic.twitter.com/NZibBCTIae
— Joseph Young (@iamjosephyoung) May 23, 2017
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