Chinese Social Media Leaders Invest in Crypto

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Mondays Bitcoin price surge is becoming an increasingly common occurrence and can be compared to previous. The increase in value of both Bitcoin (BTC), Ethereum (BTC) and other cryptoassets, comes at a time when Chinese photo-editing software Meitu, added $40 million worth of cryptocurrency to its books. They purchased in excess of $22 million worth of Ethereum and almost $18 million worth of Bitcoin, becoming another technology juggernaut that has dove into digital asset investments. The price of Bitcoin and Ethereum has sharply increased as of Monday, with Bitcoin surpassing $1 Trillion market cap again on Tuesday closing down on its previous peak price of $58,000.

Industry leaders Tesla and Square have already unveiled their Bitcoin investments, only furthering Bitcoins place as a stable investment. Meitu is the first major firm to make heavy investments into Ethereum which is currently the second largest cryptocurrency. Meitu have stated they are set to use their cash reserves to add a further $60 million into their crypto portfolio to total $100 million.

The software firm is currently listed on the Hong Kong Stock Exchange and reached market dominance in 2010 with its services that enable its users to edit their photos to create a new image for themselves. Meitu boasts of 295 million active users globally every month; however, the software firm has lagged behind its newer competitors in the perpetual digital race. The price of their stock has decreased from $18 HKD to $3 HKD in 2020.

The company’s directors are very vocal of their support for blockchain technology and decentralised finance; therefore, it comes as little surprise that they have diversified their investments into digital assets. Meitu’s spokespersons stated to the Hong Kong Stock Exchange that “cryptocurrencies have ample room for appreciation in value” this announcement comes at a time where the firm is looking for new ways to grow after 13 years. Cai Wensheng, a Chairmen of Meitu and advocate for blockchain technology and cryptocurrency, has maintained that “blockchain is a catalyst for the technological revolution” with endorsements such as this its inevitable that a company under his supervision and control would invest in Bitcoin. In 2018 a price surge had ensued in tandem with a billionaire purchasing 10,000 bitcoins and he had benefited from the purchase long term.

Inversely their investment will only generate drawbacks for the whole crypto field as they can exploit the competition and shorten some of their investment. Investments by large tech firms or social media platforms will destabilise Bitcoin’s valuation, over-inflate it and possibly create a fresh market correction, as what happened in February.