Bitcoin Trading Archives

Investors Rush for the Exits as China Moves to Halt the Rally in Bitcoin

Posted on January 10, 2017 | by [email protected]

Bitcoin recorded a surprising crash on Thursday January 5 to halt the expectations that the cryptocurrency will continue its rally to surpass its previous all-time high. Bitcoin had already crossed the $1,100 threshold and it was nearing the $1,200 threshold before it lost its footing. Bitcoin almost dropped to $800 on January 7 and it currently trades around $908 as at 9:27AM EST today.

Many people have tried to find out the reasons for the short-lived rally in Bitcoin prices. Interestingly, the prevailing opinion in the market submits that the People’s Bank of China is behind the unexpected crash in the price of Bitcoin. This piece seeks to examine how China unwittingly orchestrated the crash in Bitcoin prices.

Here’s how China ended Bitcoin’s rally

Bitcoin is already taking up position as a cryptocurrency that could displace troubled fiat currencies and end government interventionist monetary policies. Last week, we wrote on how Bitcoin is already building momentum to displace the Bolivar in Venezuela. Well, the People’s Bank of China made a preemptive strike to ensure that thoughts to use Bitcoin in place of the Chinese Yuan don’t begin to take root in China.

The PBC issued two notices from its Beijing and Shanghai branches emphasizing its position on Bitcoin’s place in the economy. The PBC noted that it considers Bitcoin as a commodity and not a currency and that investors should only trade Bitcoin with the understanding that it carries investment risks. The PBC also requested meetings with Bitcoin exchanges to encourage “self-examination” in ensuring that exchanges stay within the ambits of regulations and that they are managing risks properly.

The more troubling development that caused the price of Bitcoin to tank is the revelation that China’s foreign exchange regulator SAFE was investigating the use of Bitcoin in avoiding capital controls on China. Beijing has placed strict capital controls on the inflow of funds in and out of China but speculators believe that China’s wealthiest are using Bitcoin to bypass those capital controls.

In fact, a decent part of the rally in Bitcoin was fueled by the rumors of an increase in Bitcoin adoption amidst China’s wealthiest. In essence, moves to investigate the use of Bitcoin to evade capital controls could be a precursor to a clampdown on the use of Bitcoin in China. A clampdown on Bitcoin use in China could result in losses for investors; hence, many people have started unloading their Bitcoin holdings.

OKCoins thinks the Bitcoin should be regulated in China

Leading Bitcoin exchanges in China are supporting the government’s plan to push more regulations through the Bitcoin industry in the country. OKCoin is the second-largest Bitcoin exchange for CNY Bitcoin-trading in China – BTCC leads OKCoin in 7–day-volumes. OKCoin revealed that it had had dialogue with the PBC on its plan introduce a third-party platform. The firm however notes that the PBC is yet to make a decision on creating such a platform.

Nonetheless, OKCoin CEO, Star Xu observes that regulating the Bitcoin industry could benefit all stakeholders and that the panic selloff in Bitcoin is unwarranted. In his words,

“The industry can benefit from balanced, risk-based regulation and oversight and we look forward to further constructive discussions with the regulators and industry participants.”

Bitcoin Now Offers Traders an Incredible Opportunity to Trade Global Financial Markets Privately

Posted on November 8, 2016 | by [email protected]

Bitcoin is coming forth with incredible applications that cut across wide varieties of industries. Bitcoin is already changing the payments industry with its ease of transaction and negligible transaction costs. Bitcoin is disrupting the banking industry by providing people with a truly secure and private way to store wealth. Bitcoin is also shaping up to be a powerful economic disruptor by reducing the ability of central banks to print money out of thin air.

Now, Bitcoin is getting ready to disrupt the financial markets and a Bitcoin startup is at the vanguard of the paradigm shift. Whaleclub is a Bitcoin startup that provides people with a unique opportunity to trade other cryptocurrencies, stocks, forex, indices, and commodities with Bitcoin. This post seeks to explore possibilities for Bitcoin holders to leverage the privacy that Bitcoin offers to trade the financial markets for profits.

Meet Whaleclub

Based in Hong Kong, Whaleclub was founded to be a trading platform powered entirely by digital currency. The firm began its live trading operation in 2016 and it has more than 10,000 traders who have traded more than $100M worth of securities in Bitcoin. The firm’s COO, Peter Zivkovski says, “Our mission is to allow anyone, wherever they may be in the world, to use bitcoin to access and trade the global markets.”

Interestingly, Zivkovski notes that Whaleclub is already setting up shop at the long-term destination of the financial markets. He notes that the current trading systems in the financial markets are obsolete and that the world will eventually have to embrace a new global currency to facilitate trades in the global financial markets without the barriers of borders or currencies.

In his words, “by blending sophisticated engineering with an elegant experience, we empower thousands of traders to access worldwide markets with Bitcoin.”

How is Whaleclub different from other trading platforms?

There are possibly tens of thousands brokers all who claim to provide traders with a platform to trade the financial market. Very few of those platforms provide traders with an exposure to the financial markets through Bitcoin. However, what makes Whaleclub special is not the fact that is probably the only trading platform that provides traders with an exclusive access to the financial markets through Bitcoin.

Whaleclub is in a league of its own, different from other trading platforms because it operates at a lesser cost than traditional trading platforms. The lower operating costs can in turn be passed down to traders as negligible execution fees and low spreads. Mr. Zivkovski observed that traditional trading firms are plagued with deposit and withdrawal delays, excessive fees…

“By using digital currency instead of fiat, we can provide customers with a superior experience: instant deposits, low spreads, worldwide market access from over 190 countries, customer privacy.”

Should you consider trading the financial markets with Bitcoin?

If you believe in Bitcoin and you understand how the financial markets work, you should seriously consider trading the financial markets with Bitcoin. To start with, the private nature of Bitcoin means that you can conduct your trading and investment activities without drawing undue attention to yourself. Secondly, the strategic position of Bitcoin as a cryptocurrency with a global reach makes it easy for you to trade securities across 190 countries.

You should note that you’ll need to satisfy some regulatory requirements as a foreign investor if you wish to trade securities in a foreign country/currency. However, with Bitcoin, all borders are erased for a low-cost and private trading experience globally.

Whaleclub in action

If you want to learn more about Whaleclub and experience the community in action watch the video below.

Bitcoin Finds Strength for Bullish Rally as Chinese Yuan Becomes Weaker

Posted on October 26, 2016 | by [email protected]

China is fueling an impressive uptrend in the price of Bitcoin as Chinese investors find more reasons to store their wealth in alternative currencies. The Chinese Yuan has been falling lower in the last couple of weeks in response to the possibility that the U.S. Federal Reserve might raise interest rates by the end of this year.

However, Chinese folks are flocking to alternative currencies such as Bitcoin to hedge against currency devaluation and volatility in the Chinese economic landscape. This piece seeks to explore the relationship between Chinese economic woes, currency devaluation and its effect on the gains in the price of Bitcoin.

CoinDesk Bitcoin Price Index for China

Bitcoin soars to four-month high in response to weak Yuan

The Chinese Yuan is becoming weaker in the wake of tougher capital controls designed to limit the amount of money that Chinese people are permitted to move abroad. The weakness in the Yuan has started fuelling an increased demand for Bitcoin and the upside potential for the alternative currency is looking strong.

On October 21, Bitcoin soared by 4% to near a three-month high of $655.50 to mark the highest trading price since July 29. Trading data available in the markets also show that trading volume soared to 5.5 million Bitcoin to mark the highest point in trading volume in the last 7 months.

You’ll remember that China devalued its currency in August 2015 as a means to halt the outflow of money out of the country and in order to help its local manufacturing industry. The move to devalue the currency didn’t sit well with China’s money families and they protected their wealth by diversifying into Bitcoin and other alternative investments. Of course, the price of Bitcoin has gained about 80% from August 2015 to date in response to that devaluation among other things.

The value of Bitcoin will continue to increase going forward as the realities of a weak Yuan sinks deeper. Zhu Jiawei, COO of Beijing-based Huobi, one of the largest Chinese Bitcoin exchanges observes that “as the Yuan enters a path of depreciation, investors will consider investing in assets that can preserve value and hedge risks.” This morning, Bitcoin is already up 0.78% to $653.47 to suggest that it has found support around $640. Bitcoin is up 0.47% on the Chinese market as it trades against 4,505.87 Yuan.

Can Bitcoin cross the $1000 milestone again?

Arthur Hayes, founder of Hong Kong-based Bitcoin exchange BitMEX observes that that value of Bitcoin will continue to increase if Beijing doesn’t deviate from its plan for constant devaluation of the Yuan. It should be noted that Bitcoin currently trades at a 2% premium against to the Chinese Yuan at 4,488.6 in contrast to the price of Bitcoin against the USD.

The Yuan is currently in a free fall against the dollar dropping 0.1% to 6.77723. Hayes observed that the Yuan could fall as much as 7% against the USD by January and that such a massive decline could cause Bitcoin to rise to cross the $1000 milestone again. In the words of Hayes, “The continued devaluation of the Chinese yuan is what’s driving traders at the margin to buy Bitcoin.”

Brazil in Deep Trouble: Bitcoin and Blockchain are what Brazil needs right now?

Posted on October 12, 2016 | by [email protected]

Recession stricken Brazil is the world’s seventh largest economy with a population of 207.8 million and GDP of US$1.775 trillion. Brazil’s worst recession in recent history continued as rising unemployment and deepening political turmoil dragged the economy into further decline. In the second quarter, Brazil’s economy contracted 3.8%, after shrinking 5.4% in the first three months of the year. It’s the longest recession since the 1930s for Brazil, Latin America’s largest economy.

The situation went from bad to worse as the President Dilma Rousseff was impeached owing to large scale corruption. While the proceedings in Brazil are currently bleak, let’s look into the possibility of Bitcoin adoption setting things right:

Bitcoin adoption currently:

The Bitcoin adoption in Brazil has been on the rise owing to the varying economic conditions. The recession cycle followed the pattern where Brazilian Real appreciated first and then went on to depreciate starting a probable hyperinflationary cycle. During the course of this pattern, there has been a significant uptick in the Bitcoin trading volume from Brazil. The dynamics of the economy and exports prompted people to look for alternatives, which turned out to be Bitcoin.

Brazil is the largest exporter of soft commodities in the world. During the deflationary part of the cycle, the Brazilian Real appreciated due to significant capital inflows. For major exporters, this was a setback as they wouldn’t be getting more local currency in exchange for their goods. Hence an alternative, they turned to receive payment in Bitcoin to be later converted into local currency when Real depreciated.

How Bitcoin can be a solution:

For an economy that is struggling, people’s faith in its currency fading, an alternative system has to be opted. Just like Government bonds where the Government backs fiat currencies, the central bank can alternatively back Bitcoin based assets. What makes this even more feasible is the transparency the underlying technology provides in such arrangements.

This decentralized system can be in place till the economy achieves stability. Later the asset holders can cash in for local currency. These assets unlike bonds can be transacted peer to peer without any processing fee.

How Blockchain adoption would be a relief:

The settlement time in Brazilian market is abnormally slow. The average settlement period for credit card transactions in Brazil is D + 28 which is very slow compared to western markets. Slow settlement times amount to loss of value of transactions due to holding up of the money. This would mean the loss of investment opportunities in time. A study by PWC revealed that Brazil has over 22 million [small and medium-sized enterprises] and micro-businesses. The mobile penetration is upwards of 132%, which has created a fertile ground for mobile payments.

Hence Blockchain based settlements which are quicker and more transparent are exactly what Brazil is looking for. Fortunately there has been significant development on this end with major banks and Mastercard trying to implement Blockchain based transactions in Brazil.

Bitcoin Price Analysis: Yuan Devaluation on the cards, Bitcoin to go up further?

Posted on October 11, 2016 | by [email protected]

First week of October has seen a positive start for the cryptocurrency, with constant trading over $600 level. The bullish push came at the start of the second week, where market broke $620 and continued to trade higher. Market finally managed to surmount the long term resistance of 100 SMA at 618-620 level cruising to higher prices. While the setup looks bullish, let’s look into the price analysis for the coming week:

Fundamental Key Points:

The adoption of the cryptocurrency and its underlying technology has always been fundamentally positive for the Bitcoin ecosystem. Here are few highlights of the past week fundamentals that might continue to have effect on the prices:

China’s Renminibi added to IMF’s SDR as fifth reserve currency
FBI investigating into $1.3 Million Bitcoin theft of Bitfinex
Russian central bank trys first Distributed Ledger Transactions
UN testing Bitcoin and Blockchain for Remittances
Dubai to move all Government Documents on Blockchain by 2020

Adding to the above, from a macro perspective, addition of Renminibi to SDR might now see further devaluation of Yuan. As the Chinese have been holding off further devaluation till the review period of IMF, there is a good chance of further downward move. In any case, it would also depend on the timing of the news release and the trading prices at that point.

Technical Analysis:

Long Term Trades:

The Long Term chart has been in an uptrend from the start of this year, with no sign of any set up change currently. The market managed to breach the 100 SMA at $618 and close above it for three consecutive days. Now this 100 SMA can act as long term support and long term positions can be taken with adequate risks. The previous swing high at $770.89 can be a target.

On the daily chart, the Bollinger bands are still not trendy. The change from sideways to trending might be a slow one driven by good fundamental factor. Hence it is important to keep an eye on reserve currencies during this period. Long term trades from the bearish side look risky unless there is fundamental bearish news driving the markets.

Short Term Trades:

On a daily chart, the Bollinger bands are beginning to open out and indicating slow change into purely bullish trend. The market has been trending in the channel as indicated by the trend lines. 100 SMA has now joined the zone of heavy support around $600, with the middle bolligner, 9, 13 and 34 SMAs. Any short term bearish trades would be risky and futile in this period.

To get apt entry positions, let’s look into lower time frame:

On shorter time frame (4 Hrs), the setup is trending in the channel of the trend lines shown. 34 SMA has been the line of constant support and has provided good entry positions for short term trades. When the 100 SMA slowly turned from being the line of resistance to line of support was an indication to get in for the break out trade. During this change, it also crossed 34 SMA signaling even strong change which was the best indication.

While taking long term positions, keeping an eye on Yuan would be very helpful.