Bitcoin Price Close To Multi-Year High On Global Financial Weakness, Yuan Devaluation
The price of the bitcoin (BTC/USD) cryptocurrency has galloped past $450, according to CryptoCoins News. The 52-week high bitcoin price is $462.99, which was observed in early December 2015. Activity among market participants over the past 24 hours has taken prices from the near-$430 level to volatile trade near $460.
In late 2013, the price of bitcoin skyrocketed to close to $1200 before quickly falling back to earth and bottoming near $210 in the summer of 2015. Through the fall of 2015, the price of bitcoin rallied, more than doubling from its low to sit at its current price of $462.27.
Bitcoin, after beginning to receive somewhat of a bad reputation due to its association with the now closed Silk Road online drug superstore run by Ross William Ulbricht, as reported by the Inquisitr, and failed bitcoin exchange, Mt. Gox, as reported by CoinBase, has some observers believing that, this time, its price move may have lasting power.
“This time bitcoin’s price increase is both logical and sustainable,” Martin Tillier with the NASDAQ wrote. “Whereas 2013’s spike was a mystery in many ways, this run up is happening for a recognizable, indeed even predictable reason.”
Tillier has speculated that with its relatively small market capitalization of near $7 billion, bitcoin may have been the target and unwitting victim of a Wall Street hedge fund with the resources to put a multi-billion dollar corner, or near-corner, on a market where such a thing was possible.
This time, bitcoin’s price advance may have more staying power. Over the past 30-day period, China’s contribution to the total number of bitcoin transactions was described as “creeping up” to 81 percent.
Early Thursday morning, the Chinese government devalued the national currency, the yuan, by 0.5 percent, according to Reuters. The move by the ruling communist party created the biggest fall permitted in the value of the yuan in over five months. The increased bitcoin activity among Chinese traders combined with the aggressive currency market intervention on the part of the government may be an indication of a source of the cryptocurrency’s relative price strength.
Bitcoin is also described as receiving “attention” from institutional Wall Street investors, with ETFs and derivatives based on underlying bitcoin holdings being traded, in addition to the currency itself.
The large swings in price that accompanied bitcoin in 2013 and 2014 that were cited as a reason that some merchants eschewed adopting it is seen as potentially diminishing as the future draws nearer. Tillier feels that because the advance in bitcoin price appears to be logical, the chance of a sharp sell-off following an inevitable top are less likely than more orderly trade, with gentle swings in price.
“Supporters of the digital currency should hope that this is the case from here on out, as a more predictable, less volatile price is essential if the number of merchants accepting bitcoin is to once again begin to increase, and that is what will drive sustained growth in price,” Tillier writes.
Expert predictions for how high the value of bitcoin could reach ranged between $500 and $100,000 in 2014, as reported by Founders Grid. Many of the experts questioned, such as the founder of the Bitcoin Association of Ireland, Alan Donohoe, believe that because a maximum number of bitcoins will exist at some point in the future — 21 million, which is quite a limited number, not nearly enough for every person on the planet to own one, and not even enough for every American. Some believe, as Donohoe does, that this scarcity will push the average price of bitcoin higher for many years to come.
Continued weakness in Chinese equity markets, followed by the Hang Seng (^HSI) and SSE Comp (000001.ss), on Friday has the potential to add further buying pressure to bitcoin prices.
[Photo by Sean Gallup/Getty Images]
