Tag Archives: bitcoin surge

Bitcoin Just Surged Past $7,000. Here’s Why

Bitcoin Just Surged Past $7,000. Here's Why

Bitcoin Just Surged Past $7,000. Here's Why

Talk about a roller coaster.

As of late Thursday, the price of Bitcoin was about $7,000, having reached the threshold for the first time just hours earlier. The upswing continued a rally that started Wednesday, when the Chicago Merchantile Exchange announced plans to offer Bitcoin futures — a move that could add even more institutional investors to Bitcoin markets and theoretically push up prices.

While Bitcoin investors cheered the rally, dubbing the CME’s decision a step toward legitimizing the cryptocurrency, it was also a reminder that digital coins still have a ways to go before reaching widespread mainstream adoption.

After breaching $6,500 for the first time a day earlier, Bitcoin prices surged as high as $7,350 in trading Thursday likely thanks to traders in Asia noticing the CME’s announcement.
 

“This is Asia waking up and FOMO,” said Timothy Enneking, managing director at Crypto Asset Management, referring to the fear of missing out on a potentially lucrative rally.

But the euphoria didn’t last. Over the course of the following 20 minutes or so, bitcoin prices shed $550 to hit $6,800—a 7.5% swing. While the volatility of Bitcoin has lessened since its inception, the price swings have continued to worry regulators and institutional investors—deterring widespread use.

Bitcoin's Three-Day Ride

Earlier this year for example, the Securities and Exchange Commission denied a proposal that would allow for a Bitcoin exchange traded fund, or ETF. Some Bitcoin investors had hoped an ETF tied to the cryptocurrency would do what they now expect the CME’s decision to do: Bring in more institutional investors.

In the filing denying the proposal, the SEC noted that Bitcoin had “fundamental flaws” that made it a “dangerous asset class to force into an exchange traded structure.”

Those flaws included price volatility, low liquidity, shallow trading volumes, and oversized exposure to trading in countries with weak regulatory oversight.

Bitcoin on the Rise

The price of Bitcoin reached three milestones in the last 30 days.

Granted, Bitcoin investors are hoping that the CME’s decision, which is still pending regulatory review, will increase the number of players in the market, thereby solving some of those problems by lowering volatility and increasing liquidity.

But other issues, including building a regulatory frame for Bitcoin both in the U.S. and abroad will take time. On top of that, Bitcoin is still undergoing growing pains on the technological side. Bitcoin users are now preparing for a potential “2x hard fork” called “Segwit2x” coming later this month.

Since Bitcoin is decentralized, its users must agree to update to the same software and rules to keep the cryptocurrency running. If just some users decide not the abide by those changes, it creates a new cryptocurrency. So far, the 2x hard fork, which would in theory increase the speed of transactions by increasing the size of blocks to 2 megabytes from 1 megabyte, has been divisive. The lack of consensus has spurred worries that the Bitcoin community itself could fragment.
 

And despite news of the CME’s decision, Thomas Lee, who is bullish on the cryptocurrency, warned Thursday owners will have to clench their teeth as bitcoin prices may still have further to fall before rebounding.

“For those tactically minded, we would be buyers of bitcoin in the $5,500 range, but such a pullback does not need to happen,” Lee, a managing partner of Fundstrat Global Advisors wrote in a Thursday note. In the long-term, Lee expects Bitcoin prices to reach $25,000 by 2022.

Authors: Lucinda Shen and Grace Donnelly November 2, 2017
 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Will the Disinflation of Bitcoin Lead to Long-Term Price Surge?

Will the Disinflation of Bitcoin Lead to Long-Term Price Surge

Will the Disinflation of Bitcoin Lead to Long-Term Price Surge?

Chris Burniske, a parter at cryptocurrency-focused venture capital firm Placeholder and former cryptocurrency investment lead at ARKInvestment, revealed that 80 percent of the total supply of bitcoin is now outstanding and that its hyperinflationary period is behind it.

Will the Disinflation of Bitcoin Lead to Long-Term Price Surge

Dissimilar to most currencies and assets, bitcoin is a deflationary currency because of its unique monetary policy. Since its introduction in 2009, bitcoin was structured specifically to operate as a robust and secure store of value, and as an alternative to existing banking systems, financial networks, and currencies.

Two distinct characteristics of bitcoin which sets it apart from bank-issued or operated currencies are its decentralized nature and fixed supply. Bitcoin’s supply is capped at 21 million and consequently, it is not possible for more than 21 million bitcoin to exist.

Disinflation and Decreasing Supply of Bitcoin

Because there will only be 21 million bitcoins and no additional bitcoin can be created after the supply achieves its cap, only a limited number of investors would be able to hold one full bitcoin.

Chris Burniske, a parter at cryptocurrency-focused venture capital firm Placeholder and former cryptocurrency investment lead at ARKInvestment, revealed that 80 percent of the total supply of bitcoin is now outstanding and that its hyperinflationary period is behind it.

bitcoinDissimilar to most currencies and assets, bitcoin is a deflationary currency because of its unique monetary policy. Since its introduction in 2009, bitcoin was structured specifically to operate as a robust and secure store of value, and as an alternative to existing banking systems, financial networks, and currencies.

Two distinct characteristics of bitcoin which sets it apart from bank-issued or operated currencies are its decentralized nature and fixed supply. Bitcoin’s supply is capped at 21 million and consequently, it is not possible for more than 21 million bitcoin to exist.

Disinflation and Decreasing Supply of Bitcoin

Because there will only be 21 million bitcoins and no additional bitcoin can be created after the supply achieves its cap, only a limited number of investors would be able to hold one full bitcoin.

But, bitcoin’s deflationary supply is not an issue for investors and merchants that adopt bitcoin as a digital currency because it is divisible. Currently, many bitcoin wallets and merchants use “satoshi” as a unit, with one satoshi representing 0.00000001 bitcoin.

At the Texas Bitcoin Conference, economist Robert Murphy from the Austrian School of Economics, refuted the criticism of conventional economists that previously condemned the monetary supply of bitcoin. Murphy stated:

“Part of where this fear of deflation comes from is, historically, it’s associated with very bad economies. So, during the Great Depression of the 30s, there were falling prices. And there are other periods where prices fell when things were bad, but I would argue that the causality was the other way around. Partly what was going on there was people were concerned because the economy was so terrible. And, so what do you do when you’re afraid? You don’t want to invest in companies and things like that. You rush to liquidity. You rush to hard money. That’s why you often see in periods of panic people will rush to the money, so you see prices of all other things quoted in money fall. So, it’s not that the falling prices caused the bad economy. It’s the other way around.”

The deflationary monetary policy of bitcoin will only increase the demand for bitcoin in the long-term. As noted by Burniske, already 80 percent of bitcoin’s supply is outstanding and the creation of bitcoin will be limited as years pass, upon the “halving” of miner reward.
 

If Bitcoin’s Current Rate of Growth is Sustained, its Value Will Increase Drastically

Several analysts including RT’s Max Keiser, Harvard academic Dennis Porto, and Saxo Bank senior analyst Kay Van-Petersen have provided a strong case of the bitcoin price surpassing $100,000 within the next ten years. In order for bitcoin to achieve $100,000 in value, its market cap would need to increase beyond $2.1 trillion.

Currently, many investors and traders have invested in bitcoin as a safe haven asset and a long-term investment. But, as bitcoin evolves as a technology and a robust financial network, it will soon compete with reserve currencies, existing banking systems, and traditional assets such as gold.

For the long-term growth of bitcoin’s market cap and price, its deflationary nature will be a vital factor to sustain bitcoin’s upward momentum and demand for bitcoin from the global market.
 

Author: Joseph Young on 07/10/2017

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member