The cryptocurrency has stalled recently, but news of TikTok's US joint venture may have buoyed the stock market and perhaps boosted Bitcoin as well.
Bitcoin and stocks soar after TikTok's US pivot
More than 2 billion users have now downloaded the once-obscure Chinese short video sharing application, an impressive number that likely spared it from being banned in the United States. CNBC reported on Friday that TikTok, which was already banned from doing business in Canada and was temporarily banned from the United States due to national security concerns, plans to continue operating in the United States through a joint venture with Oracle and others.
(TikTok has amassed around 2 billion users, making it one of the most popular social media platforms in the world./Statista)
The app is a Gen Z staple, popularizing viral social media trends like dance challenges, lip syncing, and point-of-view skits. However, parent company ByteDance is a Chinese corporation and must comply with the Chinese government's infamous 2017 National Intelligence Law, which requires Chinese companies to provide government assistance in matters of national security.
Article 7 of the law states: “All organizations and citizens shall support, assist, and cooperate with national intelligence operations in accordance with the law, and shall protect the secrets of national intelligence operations that they have knowledge of.''
Its Orwellian language horrified the United States and Canada, and both countries banned ByteDance from their respective countries. But former businessman Donald Trump managed to thwart the U.S. embargo and finalize an agreement that resulted in the creation of a U.S. joint venture involving Texas-based tech giant Oracle, California private equity firm Silver Lake, Abu Dhabi-based investment firm MGX and several other investors.
read more: Inflation has subsided and stock prices are rising, so why is Bitcoin still in the doldrums?
The new investment partner group will own 50% of the company, currently called TikTok USDS Joint Venture LLC. Oracle soared on the news, leading Friday's rally as both stocks and Bitcoin rose. The rise in stock prices may have influenced the subsequent rise in BTC prices, but the relationship is likely tangential.
“They say it will be trained on U.S. data,” said Rush Doshi, assistant professor at Georgetown University's Security Studies Program, referring to how the TikTok USDS will create and train new algorithms to ensure that U.S. content is “not manipulated from outside.”
“That's great, but have the algorithms been transferred and licensed, or are they still owned and controlled by Beijing and Oracle just providing 'monitoring'?” Doshi asked.
Overview of market indicators
At the time of writing, Bitcoin price was $88,007.63, up 2.82% on the day but down 2.41% for the week, according to data from Coinmarketcap. The cryptocurrency traded as low as $85,107.66 and as high as $89,339.12 in the past 24 hours.
(Bitcoin Price / Trading View)
Daily trading volume decreased by 9.77% to $47.42 billion, and market capitalization increased to $1.75 trillion. Bitcoin's dominance decreased by 0.54% to 59.55% as altcoin gains exceeded BTC gains.
(Bitcoin Dominance / Trading View)
Total open interest in Bitcoin futures rose 3.73% to $59.13 billion, according to data from Coinglass. The liquidation amount for the day decreased to $99.27 million, of which short sales accounted for $61.66 million. Long investors accounted for about a third of all liquidations, posting losses of $37.61 million.
Frequently asked questions ⚡
- Why did Bitcoin and stock prices rise after the TikTok news?
The market rallied as TikTok announced a joint venture in the US, allaying regulatory concerns and increasing risk-on sentiment. - What has changed in TikTok's position in the US?
TikTok will continue its U.S. operations through a new joint venture involving Oracle and other American investors. - Why was TikTok in danger of being banned?
U.S. officials cited national security concerns related to China's intelligence laws governing ByteDance. - Did TikTok's trading directly cause Bitcoin to rise?
Although not directly, the rise in stock prices likely improved broader market sentiment, which spilled over into Bitcoin as well.
