TikTok Becomes American and Bitcoin and Stocks Are Loving It

The cryptocurrency had recently stalled, but news of a TikTok U.S. joint venture buoyed equity markets and perhaps boosted bitcoin as well.

Bitcoin and Stocks Surge with TikTok’s U.S. Pivot

More than two billion users have now downloaded what was once an obscure Chinese short-form video-sharing application, an impressive number that likely saved the app from being banned in America. TikTok, which has already been prohibited from operating in Canada and was temporarily banned in the U.S. over national security concerns, will now continue its American operations via a joint venture with Oracle and other firms, according to reporting by CNBC on Friday.

(TikTok has amassed roughly 2 billion users, making it one of the most popular social media platforms in the world. / Statista)

The app is a Gen Z staple and has popularized viral social media trends such as dance challenges, lip syncs, and point-of-view skits. But its parent company Bytedance is a Chinese entity and must comply with Beijing’s notorious 2017 National Intelligence Law, legislation that compels Chinese firms to assist the government with national security.

“All organizations and citizens shall support, assist, and cooperate with national intelligence efforts in accordance with law, and shall protect national intelligence work secrets they are aware of,” Article 7 of the law states.

That Orwellian language spooked the U.S. and Canada, both of which banned Bytedance from their respective countries. But Donald Trump, ever the businessman, managed to stall the U.S. prohibition and worked out a deal that has now culminated in the formation 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 Cools and Stocks Rise, So Why Is Bitcoin Still Floundering?

The new group of investment partners will own 50% of what will now be called TikTok USDS Joint Venture LLC. Oracle soared on the news, leading a Friday rally that saw both equities and bitcoin climb. The rise in stocks may have influenced the subsequent uptick in BTC’s price, although the connection is likely tangential.

“They say it will be trained on US data,” said Rush Doshi, assistant professor in the Security Studies Program at Georgetown University, referring to how TikTok USDS will create and train a new algorithm to ensure American content “is free from outside manipulation.”

“Great, but has the algorithm been transferred, licensed, or is it still owned and controlled by Beijing, with Oracle merely providing ‘monitoring?’” Doshi asked.

Overview of Market Metrics

Bitcoin was priced at $88,007.63 at the time of writing, up 2.82% for the day but down 2.41% for the week, Coinmarketcap data shows. The cryptocurrency traded as low as $85,107.66 and as high as $89,339.12 in the last 24 hours.

( Bitcoin price / Trading View)

Daily trading volume eased 9.77% to $47.42 billion, and market capitalization rose to $1.75 trillion. Bitcoin dominance fell 0.54% to 59.55%, as gains from altcoins surpassed those of BTC.

( Bitcoin dominance / Trading View)

Total bitcoin futures open interest jumped 3.73% to $59.13 billion, according to data from Coinglass. Liquidations for the day subsided to $99.27 million, with short sellers accounting for $61.66 million of that total. Long investors represented roughly a third of all liquidations, posting $37.61 million in losses.

FAQ ⚡

• Why did bitcoin and stocks rise after the TikTok news?
  Markets rallied after TikTok announced a U.S. joint venture, easing regulatory fears and boosting risk-on sentiment.
• What changed with TikTok’s U.S. status?
  TikTok will continue operating in the U.S. through a new joint venture involving Oracle and other American-aligned investors.
• Why was TikTok at risk of a ban?
  S. officials cited national security concerns tied to China’s intelligence laws governing ByteDance.
• Did the TikTok deal directly drive bitcoin higher?
  Not directly, but the equity rally likely improved broader market sentiment that spilled over into bitcoin.