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Ignore Naysayers, Bitcoin is the New Gold

Posted on February 8, 2017 | by [email protected]

Bitcoin investors are going through a rough patch right now as the cryptocurrency struggles to hold on to its gains from 2016. The main reason behind the headwinds facing Bitcoin is the government-led probe on Bitcoin exchanges in China. Interestingly, critics are taking the current weakness facing Bitcoin as ‘proof’ that their gloomy forecasts on Bitcoin will happen.

However, that Bitcoin is undergoing a rough patch doesn’t erase the fact that Bitcoin is a disruptive new force. This piece seeks to explore some of the reasons you should ignore naysayers and embrace the hedge that Bitcooin provides as a safe haven on par with gold.

Bitcoin is the new gold

It is no longer news that gold is a safe haven commodity that provides investors with a measure of safety and stability in times of economical and geopolitical uncertainty. Interesting, Bitcoin is shaping up to be another important commodity/currency with a safe haven appeal that leaves gold in the dust.

To start with, Bitcoin’s value as a safe-haven alternative currency became obvious during the 2016 U.S. presidential elections. Wall Street investors have mostly believed that the U.S equities market could crash if Donald Trump won the elections. Hence, when the news of Trump’s victory broke, investors pulled out their funds from traditional assets into alternative assets such as gold and Bitcoin. In fact, Bitcoin surged to towards breaking its all-time record high before the rally eventually slowed down.

More so, Bitcoin is an ‘independent’ currency that is not subject to the oversight of a central control unit. Bitcoin’s independence means that no government can rise up to introduce monetary or fiscal policies to influence the value of the Cryptocurrency. Bitcoin’s safe haven status as an alternative currency lies in the fact that its value is enmeshed in the realities of demand and supply as opposed to fiat currencies whose values can be manipulated at the whims and caprices of a government or its agents.

The fact that the Bitcoin system is built on a network of distributed and dispersed network of computers globally also helps to decentralize its operations. Bobby Lee, the CEO and cofounder of BTCC, a Bitcoin exchange in China agrees s that “the world is starting to realize that, just like gold is a good hedge, bitcoin is a great hedge against the system because it’s outside the system.”

Bitcoin’s reputation for fueling illegal transactions is not factual

Another point that critics often tout in their attacks against Bitcoin is that the cryptocurrency is often used to buy and sell illegal activities. The prevalence of Bitcoin on the dark web and its association with Silk Road has also fueled the flames of its questionable reputation.

However, the fact remains that any currency can be used as payment for illegal transactions and the noise about Bitcoin’s use in illicit activities is mostly propaganda designed to discredit the cryptocurrency. One of the facts that Bitcoin critics might not want to acknowledge is that other top tier currencies such as the U.S. dollar are used as payment for illegal and illicit activities much more than Bitcoin. In fact, Bitcoin doesn’t cause illegal activities anymore than the U.S. dollar cause counterfeiting, drugs, and kidnapping among other crimes.

Trump’s anti-immigration policy is causing the Bitcoin prices to soar and here’s why

Posted on February 1, 2017 | by [email protected]

During the presidential race, Republican candidate Donald J Trump came out with a set of policies that defined his ideologies and set up the foundation for a successful campaign. The economists around the world were concerned that Trump’s presidency and economic policies would result in a market collapse. Nevertheless cryptocurrency proponents were optimistic about Trump’s presidency as his policies were positive re-enforces for fintech industry. This reflected in the rise of Bitcoin prices when Trump won the elections in 2016.

President Donald Trump took to office in January and started to deliver on his promises right off the bat. Trump has signed an anti-immigrant policy in the first week of administration and this has caused a lot of ruckus amongst the populous. But this event has boosted Bitcoin prices in the most unexpected fashion and has proven positive for cryptocurrency markets. Let’s dive deep into how the policy has affected global markets and Bitcoin prices in particular.

The ban on Immigrants:

President Donald Trump signed an executive order 27th -Friday that indefinitely suspends admissions for Syrian refugees and limits the flow of other refugees into the United States by instituting what the President has called “extreme vetting” of immigrants. The order bars all persons from certain “terror-prone” countries from entering the United States for 90 days. The countries impacted due to the ban are Iran, Iraq, Syria, Sudan, Libya, Yemen and Somalia. The real blow came when even Green Card holders from the respective countries were ordered to be deported when looked into the finer details.

The petition that followed:

The order came as a surprise for many Multi-National Companies that base the core of the structure on the kind of talent diversity offers. The order wasn’t received in good stead by these companies as this would, to a little extent, result in loss of workforce for these companies. To counter these effects, major tech companies like Microsoft and Amazon have launched legal action against the executive order. Both firms have joined the Washington state government in a lawsuit challenging the details within the order. As part of the case, Microsoft, Amazon and also Expedia, are all preparing legal statements saying how the move from Trump has an impact on their business.

How Bitcoin markets benefited:

With corporate giants backing the petition, the global equity markets are in a state of apprehension. The effect of the ban has reflected in the market prices of the stocks of the highly affected companies and continues to remain in that state. With so much uncertainty surrounding the global markets, investors are looking for options to shield their assets from the impending volatility. That is where Bitcoin and Gold come into picture. Bitcoin is the digital analogue of Gold which proved out to be the Safe Haven in 2016 with better returns and non-correlation. On the same accounts, the Bitcoin prices saw a good boost over the weekend with prices approaching all time high again. Will further policies from Trump give Bitcoin the boost to breach all time high? That only time will tell.

Global markets tank, Bitcoin’s uncertainty lets Gold regain its stature as ‘Safe Haven’

Posted on January 12, 2017 | by [email protected]

The global markets slumped on January 12, 2017 after a news conference by President-elect Donald Trump. Assets declined across the globe with European, Asian shares and S&P 500 futures all falling, while the dollar slumped against most currencies. The conference disappointed the institutional investors with reveals to very little details as to economic and trade plans. This element of uncertainty resulted in a major slump in US dollar trading after recovering from a three week low. Surprisingly even after so much market commotion, the Bitcoin price remained unaffected despite so much market activity. Let’s look into why Gold reigned while Bitcoin was left behind during the latest market collapse:

Bitcoin stagnant as uncertainty looms:

The year had a lot of surprises that came as backlash for Bitcoin’s Bull Run which neared the all-time high start of this year. Firstly when the prices approached all time high, panic associated to Chinese policies led to the first stage of the collapse. After briefly trading at $900 range for quite some time the next collapse occurred a couple of days later. This was majorly due to the news that Peoples Bank of China has acted on Bitcoin regulation in 2017. They have contacted exchanges to monitor the process in order to avoid currency getting out of the country.

Following the second crash, Bitcoin has formed some kind of support around $750 and has been trading in the area ever since. It remained unaffected during the Yuan’s fall and the global market’s pandemonium since the investors are looking at it cautiously now. After trading sufficient volume and building a strong support, it might finally take off and adhere to the conventionally observed fundamentals.

Gold returns as the only ‘Safe Haven’:

Gold spiked up to over $1,200 after Wednesday’s shift in market dynamics. The price jump for a mere market scare can be attributed to Bitcoins unavailability during this time. The fact that Bitcoin rallied upto the high but wasn’t able to breach it significantly has left an element of doubt in the minds of institutional investors. Hence the general inflow of funds has been redirected to Gold, retaining its status as reliable asset. Whether Bitcoin would be able to displace Gold again as a security asset or Gold will continue to dominate this sector, only time will tell.

Bitcoin IRA is similar to a Bitcoin Safe Haven

Bitcoin Safe Haven: 5 Times Bitcoin Performed

Posted on July 31, 2016 | by [email protected]

Bitcoin Safe Haven

Global markets are always affected by macroeconomic issues that majorly impact a particular country or region. Many a times, mere speculation about an impending event causes volatility and moves the markets significantly. Whenever this happens, investors scurry to find a safe haven so as to move their investments and shield themselves from the negative impact of the event. Traditionally, gold has been the safe haven whenever there was a massive shift in the trading prices. But this bubble was burst with the ‘Oil Slump’ of 2014, where the fall in oil prices affected other commodities. Gold and other precious metals marked historic lows and the market participants were left with limited options to safeguard their assets.

The introduction of crypto-currencies and their increasing trading volumes (especially Bitcoin), caught the eyes of many investors. They proceeded to diversify their portfolios using Bitcoin as a major instrument. This could be substantiated from the trading prices of Bitcoin during the oil slump which experienced a short term boost. This happened time and again when there was an imminent threat to any economy which could have an impact globally. Let us look at five such instances when Bitcoin was looked at as a good stand in investment.

Greek Crisis:

There was heavy speculation around Greece facing a possible exit from Eurozone by defaulting on its debt obligations. This created tension in the European Commodities market which had been seeing a sharp drop in prices accompanied by strong trading volume. When the Greek economy was collapsing there was a rise in the price of Bitcoin. This was majorly attributed to the increase in volumes. It came on account of those Greek users who were shut out of their bank accounts and were hence driven to use the digital currency. But later when the situation became dire, there was a sharp drop in the trading price of commodities. During this period, Bitcoin price moved up the ladder with good trading volume. This was attributed to investors moving their funds into Bitcoin to hedge against drastic price drops in commodities.

Russian Ruble drop:

The economy of Russia was majorly impacted because of the oil slump leading to a sharp dip of Russian Ruble. The general population swapped currency for products to hold the value. However, the investors decided to trade heavily in Bitcoin to temporarily hold till their currency gets a strong footing again. This was observed in the drastic increase of trades on the Bulgaria based cryptocurrency BTC-e.

Scottish Independence Referendum:

Though the Scots voted against leaving the United Kingdom, the speculation surrounding the event drove the trading prices of pound low. During this period, there was a significant increase in the trading price of Bitcoin. This was fueled by the fact that Bitcoin was being looked up to as an alternate for British Pound in the event Scotland votes for Independence.

Yuan Devaluation:

Bitcoin marked a two year high in June 2016 owing to the devaluation of the Yuan in China. While the devaluation impacted the global economy adversely, the rise in the price of Bitcoin was attributed to heavy investments being shifted towards it.

UK leaving European Union: ‘Brexit’

With speculation around UK leaving the European Union, there was high volatility in the price of Bitcoin. But the volatility was observed to be in an upward trend. This is made it clear that the market players are moving their funds into Bitcoin to avoid the repercussions of the Brexit. This can be observed from the low volumes in the European trading platforms and increased volumes in the Bitcoin platforms.

Hence it is indeed true that Bitcoin can in fact be the safe haven at least for short duration. Chris Burniske, a block chain analyst and products lead at investment manager ARK Invest opines:

“Bitcoin[and Gold] shares those same characteristics: Both have an extremely limited supply and a relatively inert state. While gold has had a bit of a run in 2016, over the last five year period it’s been a terrible performing asset. So you’ve got people starting to wonder where there are safe havens to store their assets. I think you have lot of people saying ‘Hey we want to diversify a little bit’ making allocations to bitcoin’.”

Hence Bitcoin can in fact be termed as ‘Digital Gold’.