Greece Archives

Towering speculations over Bitcoin price in 2017: $2000 on the cards?

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

Bitcoin supporters are seeing 2017 as a very positive year owing to a pool of factors. From Trumps presidency to EU – led bail outs, improving adoption to increasing investments, the market dynamics look very favorable for the price. Many mainstream groups have openly come out with their support towards the cryptocurrency and discussed about the possible factors influencing their decisions. Bitcoin has recently touched its year’s high and has still been on a bullish path. Going strongly into the next year, let’s look into the predictions centering Bitcoin and possible investment opportunities:

The Trump Factor:

Trumps economic policies as per his Presidential Campaign, look very favorable for the growth of Fintech services. Especially Trump promised fiscal spending binge might add to approximately $20 trillion of U.S National Debt. This would triple the current U.S budget deficit from about $600 billion to $1.8 trillion. The move would cause the growth and inflation to increase unproportionately. Consequentially this would result in a hike in the interest rates and might see US dollar soar new heights. The economic fabric would be disturbed on a hike and would have a significant impact on the emerging markets and China in particular. To get away from the rippling effects of such impact, people would move to invest in cryptocurrencies and opt for alternate payment systems.

The EU Fall Out:

Post the housing collapse and its crippling effects; the European Union has experienced real turmoil in terms of ‘Debt Crisis’. Luckily Greece will receive a short term debt relief from Eurozone creditors to stay afloat, though IMF was not on board. Bad lending practices have landed Italy in the same zone, with people voting against constitutional reforms. Italian Prime Minister Matteo Renzi is now poised to resign after suffering the referendum defeat. With so much turmoil in Eurozone, next year is going to be very unpredictable and would see European commodity prices waver with high volatility. Historically with events like Brexit, where European commodities tanked, Bitcoin prices soared proportionately indicating the inflow of funds. Hence a similar move can definitely be expected for any of these eco-political events.

Saxo Bank predictions:

Saxo Bank is a Danish Investment Bank that has been prominent since 1992. Earlier CEO of Saxo, Lars Seier Christensen was personally vested in Bitcoin and hence the firm took a keen interest in cryptocurrencies. According to their recent prediction list, Saxo bank says that Bitcoin price might very well surpass $2100 in 2017.

Saxo explained that:

“If the banking system as well as sovereigns such as Russia and China move to accept bitcoin as a partial alternative to the USD and the traditional banking and payment system, then we could see bitcoin easily triple over the next year going from the current $700 level to +$2,100 as the block-chains decentralised system, an inability to dilute the finite supply of bitcoins as well as low to no transaction costs gains more traction and acceptance globally.”

This is also backed by Trump’s policies, Russia’s steps to legalize Bitcoin after a temporary ban and many other factors that are favorable.

Global investors watch out for Italian referendum, Bitcoin to get the push?

Posted on December 4, 2016 | by [email protected]

The European region has always been a major Bitcoin market mover in times of economic or political crisis. This is evident from what happened with Brexit this year. The pre-Brexit tension and the post-Brexit shocks caused turbulent economic times for European residents. The Brexit from EU caused Bitcoin prices to spike up considerably and make it the safe haven against the adverse market reactions. December 4^th can witness a similar push in Bitcoin prices as EU will witness Italian referendum. While market is waiting to for what might happen, let’s look into the dynamics of the referendum:

Italian Referendum:

On December 4^th, the global markets should be prepared for an economic tremor as Italy prepares for a referendum. The Italian citizens would vote on changing resolutions to amend constitutions. This also involves absolving the power given to State, Parliament and Bureaucrats. The sale of Italian government bonds and securities has been on the rise anticipating the crisis. Italy currently has eight troubled banks currently that tank if the referendum doesn’t turn out in favor. Adding to the tension, Prime minister Matteo Renzi declared that he will quit if people vote against the resolution.

Impending market chaos:

The aftermath of the controversial referendum can be disastrous as Italy is one of EU’s biggest debtors. Owing to bad lending practices, the country’s borrowing has led to financial instability as many banks are under heavy pressure now.

Financial Times reporter Rachel Sanderson stated,

“Italy’s banks have €360bn of problem loans versus €225bn of equity on their books after successive regulators and governments failed to tackle a bloated financial system where profitability was weakened by a stagnant economy and exacerbated by fraudulent lending at several institutions.”

How the markets will react to this would surely be of interest for all global investors.

How Bitcoin will react:

If the Italian referendum goes sour, it could mean investors could turn to possible uncorrelated assets such as bitcoin and Gold. Just before the Brexit vote, Bitcoin spiked to $675. As soon as the decision became public, global stock markets began to plunge. However, gold and bitcoin values went up significantly as investors turned to safer hedges. Just one week before the vote took place, the San Francisco-based exchange Coinbase saw a 55% rise in British registrants. After the vote was out, it was noted that a 350% increase in UK sales of Bitcoin. Even during the fears of possible ‘Grexit’- Greece Exit, there was good increase of volumes of Bitcoin. Basing on these historical observations, it is very possible that we might see something similar during the referendum.

Can Bitcoin be the saviour during the next Global Financial Crisis?

Posted on October 3, 2016 | by [email protected]

The housing collapse in 2008, that shadowed the global financial markets, has had gripping repercussions on the global economy. With Greece, Venezuela and many other European countries still trapped in high recession, their economies are looking shaky and unstable. This is the consequence of the Great recession and countries are still feeling the ripples of it. As much as we don’t like it, another economic crisis is inevitable if the monetary policies aren’t very effective.

An economic crisis is a signal of how the existing monetary system has failed, which prompts for alternatives. Outside precious metals and the good old barter system, Bitcoin appears to be the best fit alternative to the existing system. Decentralized, border-less, peer-to-peer, and open-access digital currency surely seems to be a best fit in the face of calamity. Let’s look into how prepared Bitcoin is for the next Economic Crisis:

Sailing on both Tides:

An economic collapse can be of two types: Inflationary and Deflationary

Inflationary collapse or hyperinflation happens when an economy experiences very high and usually accelerating rates of inflation. This rapidly erodes the value of the local currency causing the population to minimize their holdings of local money. The population normally switches to holding relatively stable foreign currencies. Under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value. The value of economic items remains relatively stable in terms of foreign currencies.

Deflationary collapse or Deflationary spiral happens when a period of decreasing prices leads to a situation whereby the economy collapses. Deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the real value of money over time; conversely, deflation increases the real value of money – the currency of a national or regional economy. This allows one to buy more goods and services than before with the same amount of money. Economists generally believe that deflation is a problem in a modern economy because it increases the real value of debt. This may aggravate recessions and eventually lead to a deflationary spiral.

How Bitcoin would fare under both circumstances:

Inflationary collapse:

In an inflationary collapse, people would be scrambling to buy bitcoin and other solid assets such as gold. This would be in an effort to preserve their savings from the debilitating effects of inflation. But for Bitcoin to be favored over other assets, the adoption level of Bitcoin should be very high. The digital currency should evolve to a stage where it can be used for all day to day transactions. This is prevalent in countries like Argentina, Venezuela and Greece. Users are actually looking at Bitcoin as an alternate to acquire foreign currencies and goods.

Deflationary collapse:

In this case, for Bitcoin to actually be preferred as an escape option, the currency should see mainstream adoption. The central banks and lenders should be able to accept Bitcoin in exchange for debt in fiat currencies. Unless the scenario is that positive, you’d see a massive selloff of bitcoin. This is because people would want to get as much USD as possible in order to pay debts.

In a financial crisis, there are limited tools available to sovereign entities to stem the crisis. Devaluation, bail-ins and capital controls are the go-to tools, Bitcoin counters them all. Bitcoin extends the basic properties of good money with extreme, no-cost portability, security and stealth. These properties are extremely valuable in cataclysmic financial collapse. However its utility majorly depends on adoption of the cryptocurrency before the impending crisis.