Connect with us

Bitcoin News

Here are 5 theories for the Bitcoin price spike

Bitcoin spiked to more than $7,500 on Sunday, more than double its price in mid-December. Cryptocurrency enthusiasts on Reddit proposed several theories for the sudden rally. They highlighted the US-China trade war, institutional interest, exodus from alt coins, the Bitfinex scandal, and the Binance hack as possible reasons. Watch Bitcoin trade live. Bitcoin spiked to…

Here are 5 theories for the Bitcoin price spike

Bitcoin

  • Bitcoin spiked to more than $7,500 on Sunday, more than double its price in mid-December.
  • Cryptocurrency enthusiasts on Reddit proposed several theories for the sudden rally.
  • They highlighted the US-China trade war, institutional interest, exodus from alt coins, the Bitfinex scandal, and the Binance hack as possible reasons.
  • Watch Bitcoin trade live.

Bitcoin spiked to more than $7,500 on Sunday — a sharp rise from its $5,000 level at the start of May, and more than double its price in mid-December. Analysts have struggled to identify one single catalyst.

“With no major news factors behind the aggressive appreciation, the sharp $1000 jump over the weekend remains a mystery to investors,” wrote Lukman Otunuga, Research Analyst at FXTM, in a research note.

However, crypto-fans have weighed in with competing theories on its sudden rise, which run the gamut from compelling to wildly far-fetched. 

Here are five reasons for the rise, according to Reddit users:

1. Safe haven

“It’s possible that a great number of rich people know that the traditional markets are effed eight ways to Tuesday,” wrote diydude2 on the r/bitcoin thread’s daily discussion.

President Trump has sparked a global market sell-off after accusing China of walking back agreed provisions in a draft trade deal, hiking tariffs on $200 billion of Chinese goods, and preparing to expand tariffs to effectively all Chinese products in the next month if a trade agreement isn’t struck. Investors may have bought up Bitcoin to hedge their exposure to conventional assets.

2. Mainstream appeal

“Institutions are scrambling to get in ahead of the traditional brokerages’ launch (Fidelity, Ameritrade, Etrade) so they can dump on the next wave of retail investors to enter the space,” wrote Savage_X in the same discussion.

Fidelity, one of the world’s largest asset managers, will begin buying and selling bitcoin for its institutional customers in the next few weeks, according to Bloomberg. Online broker TD Ameritrade introduced trading of bitcoin futures in December, while securities brokerage E*Trade is preparing to enable cryptocurrency trading on its platform, Bloomberg wrote. 

Rival institutions could be buying up bitcoin with the expectation that the entry of major players into the market could bolster the cryptocurrency’s credibility and drive mainstream purchases, pushing up its price. 

3. Exodus from alt coins

“The ICO experiment is over,” wrote gonzales82 in a thread about the Bitcoin spike, referring to the recent boom in cryptocurrency launches known as initial coin offerings. 

“People are waking up to the realization that bitcoin is a much larger idea than any of the blockchain phantasmagorias people have been trying to push for the last couple of years.”

There’s evidence to support the idea that investors are shifting funds from other cryptocurrencies to Bitcoin.

“From purely looking at the data — one factor that could be behind at least the BTC rally is the conversion of ‘alt’ coins into bitcoin,” Sid Shekhar, co-founder of Token Analyst, said in an interview with Business Insider. “For example, we have consistently been seeing a lot more BTC being transferred out of exchanges than going in.”

4. The Bitfinex scandal drove Bitcoin purchases

The Bitcoin rally could also be a product of the Bitfinex scandal. New York Attorney General Letitia James recently filed a lawsuit accusing the owner of the Bitfinex exchange of “ongoing fraud” and draining at least $700 million from the reserves backing its digital coin, Tether, to cover up $850 million in missing funds.

‘I think Bitcoin is going up because [of] the whole Bitfinex thing going on…I think they are having a lot of issues [fulfilling] withdrawal requests,” wrote sanderson22. 

“I think a lot of people are buying Bitcoin [and] getting out of Tether, I think a crash will come if Bitfinex’s house of cards collapse[s] and they wound up losing a lot of people’s money.”

Other commenters voiced similar views.

“It seems to me as soon as the Tether/Bitfinex scandal started to come out the price went straight up,” wrote Swt23. “Could this not be from people that had a lot of the money stored in Tether [deciding] it might be safer to move out of Tether into Bitcoin.”

A wild theory suggests Bitfinex’s owners are driving up the price of Bitcoin to replenish the exchange’s cash reserves.

“Bitfinex is throwing everything they have at generating a new pump to attract whatever $USD influx they can get from FOMO’ing butters because they are otherwise completely cash insolvent,” wrote Poop_Shame. 

5. The Binance hack proved Bitcoin’s integrity

After hackers stole $40 million of Bitcoin from Binance last week, the cryptocurrency exchange’s CEO, Changpeng Zhao, proposed a rollback of the blockchain to reverse the illicit transactions and recover the funds. The fierce backlash to his suggestion may have bolstered Bitcoin’s image as a legitimate currency and fueled demand for it.

“I think [Binance] might have helped Bitcoin a lot with their suggestion to rollback the chain,” wrote 2btc20000pizzas. “That notion was swiftly shut down by the community (users, devs, and miners) almost within a single day.”

Bitcoin advocates’ claims that the cryptocurrency is “censorship-resistant” and “scarce” became “more tangible when the very notion of tampering with the blockchain was shut down within hours,” the commenter added. “I really think for a lot of people, [this] might have just [shone] a light on why Bitcoin more than any other altcoin has value, and isn’t just stupid Internet money.”

Bitcoin was up 5% at $7,048 at the time of writing.

Bitcoin_130519Markets Insider

Source

Continue Reading
Advertisement
Loading...
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Bitcoin News

Traders are piling into bitcoin as a haven against volatile markets. This researcher warns they could get burned.

Dan Kitwood/Getty Images Bitcoin isn’t a ‘unique’ hedge as it’s vulnerable to the same market risks as conventional investments, according to a new study. It becomes more exposed to factors such as inflation expectations when its price is less volatile, the researcher found. The findings are a “cautionary note” for investors, writes author Dimitrios Koutmos,…

Traders are piling into bitcoin as a haven against volatile markets. This researcher warns they could get burned.

hedge mazeDan Kitwood/Getty Images

  • Bitcoin isn’t a ‘unique’ hedge as it’s vulnerable to the same market risks as conventional investments, according to a new study.
  • It becomes more exposed to factors such as inflation expectations when its price is less volatile, the researcher found.
  • The findings are a “cautionary note” for investors, writes author Dimitrios Koutmos, as they suggest bitcoin isn’t “a unique asset class whose price behavior is detached from economic fundamentals.”
  • Watch bitcoin trade live.

An escalating US-China trade war, the slowing Chinese economy, and a prolonged Brexit process have fueled anxiety in financial markets, boosting investors’ interest in bitcoin as a hedge against volatility.

However, new research suggests the cryptocurrency may have limited value as a hedge as it’s vulnerable to the same factors that move the prices of stocks and other mainstream investments. While it escapes some of those drivers when its price is especially volatile, the increased risk may outweigh the greater returns.

“Bitcoin prices, despite their seemingly attractive independent behavior relative to economic variables, may still be exposed to the same types of market risks which afflict the performance of conventional financial assets,” wrote Dimitrios Koutmos, an assistant professor of finance and technology at Worcester Polytechnic Institute in Massachusetts, in a study titled “Market risk and bitcoin returns” published online in the Annals of Operations Research this month. 

Koutmos used treasury bill rates, the VIX and Deutsche Bank FX volatility indexes, treasury yields, forward inflation swap rates, equity indexes, and the difference between corporate bond yields and treasury yields as proxies for short-term interest rates, market-volatility expectations, and other factors that affect traditional financial assets. He examined their influence on daily bitcoin prices between January 2013 and September 2017.

His key finding was that several of these factors were “important determinants of bitcoin returns.” Specifically, short-term interest rates and investors’ expectations of stock-market and foreign-exchange volatility were significant determinants of the price of bitcoin during periods when it rose or fell sharply. Those three factors, along with general economic conditions and inflation expectations, influenced the price of bitcoin when the cryptocurrency was less volatile, according to the study.

The findings serve as a “cautionary note” for investors, Koutmos wrote, as they suggest bitcoin isn’t “a unique asset class whose price behavior is detached from economic fundamentals.”

They also indicate “bitcoin’s usefulness as a diversification instrument is time-dependent,” given the cryptocurrency was more susceptible to factors such as inflation expectations during periods when its price was less volatile. 

If bitcoin truly is a better hedge when its price is moving around, investors who bought into bitcoin’s price surge this month as a hedge against the sharp downturn in stocks might be feeling pretty smug. However, Koutmos also found that bitcoin’s superior returns during periods of high volatility weren’t high enough to offset the increased risk, meaning its returns during low-volatility periods were higher on a risk-adjusted basis. 

Source

Continue Reading

Bitcoin News

‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ Manifesto

‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ Manifesto

‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ ManifestoSelf-proclaimed “Satoshi Nakamoto” Craig Wright published a blistering manifesto that predicted Bitcoin would disappear in “moments.” | Source: Crypto Strategies/YouTube (i), Shutterstock (ii). Image Edited by CCN.By CCN: Australian entrepreneur Craig Wright published a blistering manifesto that argues bitcoin (BTC) will eventually disappear because it’s being used to facilitate criminal activity. And that perverts his original vision for the cryptocurrency.For reference, Wright has repeatedly claimed that he is Satoshi Nakamoto, the mysterious creator of bitcoin. He has yet to offer definitive proof.Civil War Erupts Between Warring Crypto FactionsWright is a proponent of Bitcoin SV (Satoshi’s Vision), which he insists is the “true bitcoin.”Wright and his ally Calvin Ayre claim BSV will supplant all other fake pretenders to the bitcoin throne and will crush rivals BTC and Bitcoin Cash (BCH) into the ground.Bitcoin Price Will Crash to Zero Says Bitcoin Cash Founder Calvin Ayre https://t.co/34ZrOZVJhu— CCN.com (@CCNMarkets) December 17, 2018‘Bitcoin Needs to Act Within the Rules’In a withering manifesto, Wright claims he created bitcoin to operate within the law and not to facilitate criminal activity like money-laundering.Wright then torched cryptocurrency evangelists who claim BTC is totally decentralized and therefore doesn’t need to play by any rules. However, Wright says they’re deluding themselves and need to be slapped awake.“I designed Bitcoin to be a system that worked within the rules.”“Bitcoin needs to act within the rules. If it does not, then the exchanges and systems that allow people to use Bitcoin act to stop it being widely used and disseminated and criminalise all of those in the system.”“If Bitcoin or any other monetary system seeks to act outside the rules, it becomes an outlaw system, and once it does, it is easy to stop.”“The majority of people want rules. They don’t want to fight in a world of uncertainty, and want to know that the contract that they have conducted will remain valid not just now, but throughout the term of the exchange — for which we need rules.”Craig Wright, the self-proclaimed inventor of bitcoin, says BSV will supplant BTC in due time.Craig Wright: Binance Facilitates CrimeMoreover, Wright insists that cryptocurrency exchanges are basically criminal enterprises that “facilitate money laundering.” Accordingly, he predicts that they will eventually go out of business “because crime will always fail.”Specifically, Wright accused Binance and Bitfinex of lying to their customers when they claim to be decentralized. He says they’re not. Wright also explained that the only reason why anyone wants a decentralized financial platform is so they can use it to hide or launder money.“Groups such as Binance who seek to facilitate money laundering and crime will always fail. They defraud you in telling you that they are decentralised and cannot be controlled.“Bitcoin is a system that was set in stone. If the protocol is changed, then it shows and demonstrates it is not Bitcoin. When those involved altered the rules, they impacted their entire ecosystem — it is a centralised power structure. They defraud you when they lie about decentralisation and tell you that they have no ability to change things but then alter the rules.”“When those in power are able to change the protocol, they can change the lives and the finances of those involved in the system at an arbitrary whim. It is why BTC is not Bitcoin.”Wright: Bitcoin ‘Will Disappear In Moments’Wright further claimed that because bitcoin has been manipulated, it will eventually disappear. And when that happens, he warned that it’ll vanish instantly.“Where a blockchain does not follow the rules…it is simple for government to stop. When the action happens, as it did with e-gold, everything invested in the system will vanish in a flash. When BTC disappears, it will not disappear slowly, it will disappear in moments.”Wright then concluded by promising that he’ll sign a Satoshi transaction after “I have definitively proven I created Bitcoin. Not before.” About The AuthorSamantha ChangSamantha Chang is a financial editor who writes about politics at BizPac Review, about business at CCN, and general news at HVY. She is a law school graduate and an alum of the University of Pennsylvania who enjoys finance, flowers, and fitness. You can find her on Twitter at Samantha_Chang.This article was edited by Josiah Wilmoth.
Source

Continue Reading

Crypto Live Prices

  • USD
  • EUR
  • GPB
  • AUD
  • JPY
Advertisement
Loading...
Advertisement
Advertisement

Trending

Copyright © 2018 Crypto141.com