bull run Archives

Bitcoin Bull Run staggered as Major Chinese Exchanges halt withdrawals temporarily

Posted on February 9, 2017 | by [email protected]

For the past couple of months, whenever Bitcoin price gets momentum and is approaching the all-time high, China has played a spoil sport in ruining the price rise. This happened once at the start of 2017 when the probing of Chinese authorities into the operational model of the exchanges tanked the prices all the way back to $750 from near all-time high. The story of Bitcoin on 9^th February is no different, the cryptocurrency was in a study Bull Run and the currency’s proponents were expecting a high breach sometime this week. While everything looked compact, the new announcement of the leading Chinese exchanges Huobi and OkCoin came up with an announcement that made the markets instantly bearish on the short term scale. Let’s dive deep into the details of what exactly happened:

The announcement:

Two of China’s top three Bitcoin exchanges Huobi and OkCoin announced that they will suspend Bitcoin and Litecoin withdrawals for a month effective immediately. During this one month period both the exchanges would set up automated monitoring systems and checks in place to prevent money laundering. While these restrictions are in place, Reminibi withdrawals wouldn’t be affected and no limit is set upon them. Both the exchanges indicated that the upgrade would be to combat “money laundering, exchange, pyramid schemes and other illegal activities”. No update was provided by BTC China on this front.

The reason behind the scrutiny:

China has been facing the problem of ‘Capital Flight’ for some time now. Implementation of ‘Capital Controls’ over various assets hasn’t been fruitful. During the course of 2016, Chinese Government has realized that while Yuan was being devalued, Bitcoin experienced unusual surge in prices. This was because investors were shifting their funds from traditional Chinese assets to Bitcoin. Chinese officials and PBOC have come to a conclusion that Bitcoin is being used for ‘Capital Flight’ and are keen to impose capital controls over the digital currency in 2017.

Effect on Bitcoin Price:

While the currency temporarily is experiencing a short term bearish trend, things would look better after a month’s period when the exchanges become fully functional. The impact of the move shouldn’t last long as Japan has already begun eating into China’s volumes owing to their growing adoption. When the Chinese exchanges imposed transaction fee and put a check on leverage available, the automated traders have sought Japanese exchanges as their new haven. After a little setback, technically Bitcoin market should be able to recover in quick time.

Did India and Venezuela together power the Bitcoin Bull Run?

Posted on January 13, 2017 | by [email protected]

From Mid 2016 Bitcoin has been forming higher highs and higher lows every month making the market overtly trendy. With Yuan devaluation helping the cause, Bitcoin prices were soaring high with ample opportunities for investing. The continuous rise in prices and reasonably acceptable volatility made Bitcoin one of the best performing assets of 2016. Perceivably, majority of the people believed that China was responsible for the steady increase in prices. But was that really the case? Apart from the visible factors, there were other global drivers of adoption that helped the cause. Let’s dive into what we believe are two major factors that pulled in the volumes:

Indian Demonetization:

Prime Minister Modi sought to fight corruption, a widespread problem in India, by pulling out higher denomination bills from circulation. Considering the country’s largely unbanked population, it was a brave move. During this phase, the government tried actively to pursue a cashless society while pushing for digital wallets and transactions. Many Bitcoin startups including Unocoin, Zebay and Buyucoin have experienced a surge in their transactions owing to the policy. This has set up the stage for the growth of Fintech startups in India and has put Bitcoin into motion. The transactions from the subcontinent contributed heavily to the boost Bitcoin has received towards the fag end of 2016.

Venezuela’s inflation:

Venezuela is one country that has received a knockout blow from the economic crisis of 2008 followed by the oil slum of 2014. The once prosperous oil-rich country is now struggling to provide citizens with the most basic needs of life. The 100-bolívar note is worthless because it is worth less than $0.03 outside of the government’s pricing system. Most people have in fact started weighing the notes instead of counting them to barter for its worth. Owing to this and to introduce higher currency notes that would have value and power of purchase, government is all set to withdraw 100 bolivar notes. This transition was the opening Bitcoin needed to etch its place in the heart of Venezuela’s economy.

How Bitcoin gained:

Both demonetization in India and hyperinflation in Venezuela had a serious side effect on the population. It undermined public confidence in national currencies as store of wealth. As in the case of any hyperinflation cycle, public has resorted to holding foreign currencies that are stable. While they have an array of varied options, Gold and Bitcoin stood out as safe assets. While Gold cannot be handled with ease, owing to Bitcoins ease of use, the currency saw inflow of funds from different phases that ended up powering the bull run.

Why 2017 can turn out to be very positive for Bitcoin

Posted on January 4, 2017 | by [email protected]

Bitcoin has had a strong start to 2017 with the trend looking strong enough to break the all-time high set in 2013. 2016 has been a positive year for the cryptocurrency with the currency showing an increase of $460 during the year. Most investors have resorted to use this digital asset as a portfolio diversifier and it has proved out to be a winning gamble. Fundamentally this was a well thought out move and it payed off with good dividends. But the question lingering in the minds of many Bitcoin enthusiasts and investors is how these strategies and Bitcoin would fare in 2017. Let’s look into few reasons why we believe Bitcoin would continue to weather the terrain to outperform assets:

China and the East step up the game:

China has always been a major price and volume driver for Bitcoin. The Yuan trading volumes observed a major uptick towards the year end owing to the Chinese Government’s announcement of imposing capital controls over Bitcoin. While this might happen sometime late this year, people are now actively moving funds out of the country at a very quick pace. This avalanche might last for a good amount of time into 2017.

With Japan abolishing sales tax on Bitcoin, South Korea encouraging Bitcoin and Blockchain accelerators and India’s demonization prompting for a cashless Indian society, the contributing prospects from the east only look stronger.

Eurozone’s loss would be Bitcoin’s gain:

The staggering effect of Brexit this year was evident when the European markets collapsed while Bitcoin soared mid-year to trigger a bull run. This quick transfer of funds into a digital unrelated asset has been the defining aspect of 2016’s Bitcoin Bull Run. In the face of Geo-Political crisis Bitcoin has replaced Gold as the safe hedge. With Eurozone still wobbly with impending debt and banking bail outs, cryptocurrencies seem to be a safer option for investing and hedging.

With Italian banking bail outs, Spain’s growing recession, ongoing crisis in Greece and post effects of Brexit, 2017 would see heavy activity in Bitcoin owing to the European continent.

USA’s growing adoption levels and the Trump factor:

The regulation of cryptocurrencies has been a hot topic in the US senate in 2016 and has seen some implementation in major states. With Trump’s policies aligned with major changes required to accelerate Fintech industry, adoption might reach higher levels in 2017. With thoughtful regulation and strong backing, mainstream adoption looks very viable in USA which would drive prices significantly in 2017.

Summing up, 2017 looks very positive for Bitcoin and Blockchain with the cryptocurrency all set to reach new levels of penetration.

Will an Italian Banking Bail-in Boost Bitcoin price over $1,000?

Posted on November 22, 2016 | by [email protected]

The past 7-8 years of study of the Bitcoin market has made one thing very clear to people around the world. Bitcoin and its underlying technology are here to stay and are slowly transforming the technological and financial sector, one step at a time. Interestingly, the digital currency’s adoption was more visible in the face of global crises. Whenever there is a massive event, that impacted a chain of markets pertaining to particular geography or a common asset class, Bitcoin always came to the rescue. Various events like ‘Brexit’ or fears of ‘Grexit’ and other cases that put conventional markets in danger showcased this feature. The adoption manifested in the form of increased volumes, prices and inflow of funds making Bitcoin the new ‘Safe Haven’. With prices now sideways between $700 and $750, let’s look into how Italian Banking Bail-in might send the prices further higher:

Problem with the Italian Banks:

Italy’s banking system is beginning to implode starting with Monte dei Paschi, Italy’s third-largest bank. Italian banks dropped as much as 7.1 percent over the past few quarters according to Bloomberg. UniCredit SpA slipped 0.3 percent in Milan, while Intesa Sanpaolo SpA decreased 0.6 percent, recovering from earlier lows. Monte Paschi’s 379 million euros ($418 million) of 5.6 percent subordinated bonds fell 3 cents to about 20 cents last quarter. Hence the bad debt situation has been a concern for the government and has also become politically sensitive topic.

How Italy plans to counter the situation:

The Banking Bail-in is really sensitive and a lot of things depend upon how this would be handled. Especially because majority of the investors in the banking bonds are retailers or average household members. Any conflicting element would prove detrimental to their interest and would defy the rules laid down by EU when it comes to bail-ins. A complete bail in would hurt all the retail bond holders and savings account holders. As such Italy can’t turn away from this crisis without a Bail-in, how they would strike a middle ground is now left to speculation.

What this means for Bitcoin:

As Monte Paschi tries to recapitalize, the Italian market will surely react. If the restructuring ends up in the same way as Cyprus and Greece, the resulting volatility might last through a year. In the case of Cyprus, Bitcoin values grew tenfold as an economic panic set in making it the newest of virtual safety nets. Due to the looming fears of Grexit, Bitcoin peaked to an annual high last summer. In June, the “Brexit” vote forced the British Pound to drop over 10 percent, and this market value quickly captured by Bitcoin, with the spike ranging over $100. Hence people should lookout for news pertaining to the bail-in while investing in Bitcoin markets for the coming weeks.