Why Chinese Social Media Leaders Invest In Crypto
By Tyler S. - Cryptocurrency expert - 12-03-2021
Monday's unexpected increase to Bitcoin (BTC) is looking to be quite close to an earlier case. On Monday, Bitcoin and Ethereum (ETH) raised their price after the Chinese photo-editing software Meitu added $40 million worth of cryptocurrencies to their treasury. They bought more than $22.1 million worth of Ethereum and $17.9 million worth of Bitcoin, becoming another global tech juggernaut that has invested in cryptocurrencies. The value of Bitcoin and Ethereum continued to surge on Monday, with Bitcoin rising to $1 trillion in value again on Tuesday and approaching its all-time peak of over $58,000.
Two major leading firms, Tesla and Square, have also announced their interest in Bitcoin, allowing the coin to cement its position as a stable investment. However, Meitu is the first global corporation to participate in the second biggest blockchain, Ethereum. It is their first stake in crypto space, as they plan to add a total of $100 million to their treasury as a secured investment funded by their cash reserves, as announced by the company on Sunday.
Meitu is a Chinese beauty app mentioned on the Hong Kong Stock Exchange that achieved market supremacy in 2010 by encouraging users to touch up portraits and develop new silhouettes for themselves. Meitu has 295 million monthly active users worldwide; however, the firm has slipped behind more tech-savvy rivals in the face of growing digitization. Their stock price decreased from $18HKD in 2017 to $3HKD in 2020.
As the company's directors are not afraid of stressing their support for blockchain technologies, it is no wonder that Meitu has invested so much in cryptocurrencies. The business told the Hong Kong Stock Exchange that "cryptocurrencies have ample room for appreciation in value" and see such an investment as an incentive to explore new ways to expand after turning 13. Cai Wensheng, one of Meitu's chairmen and a strongly outspoken supporter of cryptocurrency and blockchain technologies, asserted that "blockchain is a catalyst for the technological revolution." So, it's no surprise the business he's managing has Bitcoin investments. A big boost occurred in 2018 when the same billionaire bought 10,000 Bitcoins, and his investment has paid off for him in the long term.
So, why are major tech companies investing in blockchain or crypto technology? To begin with, they are implementing a creative culture that supports technology advances within their businesses. As we have seen in 2021, only a few businesses invested and are public about their investment. Second, others may have already directly invested in cryptocurrencies, and if they consolidate their prices, their long-term interest will become more secure. Third, as Meitu also said, their participation in Ethereum would support their recent efforts to incorporate blockchain into their overseas businesses.
China has blocked both ICOs and exchange listings as of 2018, and Meitu has announced that its investment "will reside with renowned cryptocurrencies trading platform(s) engaged by the group with good security measures set up." Their new strategy is to HODL, which means that the price for buying Bitcoin and or to buy Ethereum will stay steady in the near term.
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 destabilize Bitcoin's valuation, over-inflate it, and create a fresh market correction, as happened in February.