Bitcoin, a type of cryptocurrency Illustration: VCG

Cryptocurrencies have emerged as one of the most sought-after trading assets in the international financial market. Growing anticipation surrounding the potential easing of regulatory measures has fostered bullish sentiment across the entire cryptocurrency landscape.

Bitcoin, the world's largest cryptocurrency, traded to a record high on Wednesday, peaking north of $93,400 in a continuation of the crypto rally. But then, in the early hours of Thursday, the price quickly fell back below the $90,000 mark.

This volatility has left investors on edge and caused unprecedented tremors in global financial markets. With expectations that a major shift could take place in the regulatory stance of US authorities toward cryptocurrencies, the industry may be on the verge of a rapid development phase. 

Considering that the rapid development of cryptocurrencies is not only a reflection of technological innovation but also an important component of global digital economic competition, China needs to pay close attention to changes and evolution in the cryptocurrency sector.

Investor optimism betting that Bitcoin could surpass the $100,000 mark by the end of the year is on the rise. This optimism is partly based on the assumption that if developed economies, particularly the US, accelerate the establishment of digital asset trading centers and consider incorporating cryptocurrencies into strategic reserves similar to gold, then cryptocurrencies like Bitcoin may enter a "golden cycle."

Notably, in January, the US Securities and Exchange Commission approved the first batch of Bitcoin exchange-traded funds, including applications from prominent firms such as BlackRock, Fidelity, Ark Invest, WisdomTree and Grayscale. This move has been interpreted by the market as a form of "official recognition" for cryptocurrencies like Bitcoin in the US.

However, despite the market's high expectations for the future of cryptocurrencies, it is crucial to recognize that they are not true currencies, and they are largely instruments for highly speculative trading. 

For instance, the IMF last year issued guidance for how countries should treat crypto assets, with point number one a plea not to give cryptocurrencies legal tender status, Reuters reported. After all, cryptocurrencies do not fulfill the fundamental functions of a currency, such as a measure of value, a medium of exchange or a store of value.

This creates a future fraught with uncertainties for cryptocurrencies like Bitcoin. 

On the one hand, they possess immense potential for development as digital assets and can be applied in various fields such as payments, financing and investment. On the other hand, the absence of a clear legal status and regulatory framework makes them susceptible to misuse for illegal financial activities, including money laundering and terrorist financing. 

Furthermore, the extreme volatility of cryptocurrency prices has also had a significant impact on international financial markets, increasing the fragility and instability of the financial system. That is also why China takes a cautious approach toward cryptocurrency trade.

For China, the rapid development of the cryptocurrency market and the potential risks it entails indeed pose a new challenge. As a major driver and active participant in the global digital economy, China needs to pay close attention to changes emerging in this field, especially relevant policy changes in major economies, as these could have a great impact in shaping the overall development of the digital economy. 

Strengthening research on cryptocurrencies is not only an exploration of this emerging industry but also a means to grasp its far-reaching implications for the global economic landscape, financial markets and even the digital economy. 

While it is important to acknowledge the significant potential of cryptocurrencies as a novel type of digital asset that can drive innovation, broaden financing channels and improve the efficiency of financial services, it is equally vital to remain vigilant about market volatility, speculative behavior and the potential ramifications for the stability of the financial system. 

Given the considerable uncertainty surrounding this domain, an in-depth study is essential to gain the knowledge and insights necessary to navigate the complexities of the cryptocurrency landscape and to prepare effectively for the future.