The bitcoin price is approaching the highs it hit in June, sitting around the $744 USD mark at press time. Will it break through 2016’s previous record?
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On Chinese markets like BTCC and Huobi, the dollar-equivalent is over $10 higher than the USD markets, suggesting that country is once again driving bitcoin value.
The bull run has stumbled a few times on the way to these levels, with the sudden appearance of large red candles prompting some nervous holders to sell off parts of their stash. However each time, the price has bounced back to previous highs and then passed them.
Speculators can expect bitcoin to meet some resistance as it approaches $800 USD, as limit orders trigger. But external factors combined could keep pushing it upward.
What’s Behind the Bitcoin Price Rise This Time?
These days, it’s impossible to look at bitcoin price movements without checking events in China. In fact, that’s always been true, but many are only now starting to acknowledge its importance.
In October the Chinese yuan (CNY) recorded its largest monthly drop since its 2015 surprise devaluation. Then this past week, facing the new reality of Donald Trump’s America, it fell to its lowest value in eight years.
Bitcoin watchers have long assumed many Chinese investors use bitcoin as a means to circumvent China’s capital controls and move money out of the country. However many question the true extent of this.
Given that the CNY has been falling for over a year and bitcoin has risen over the same period, though, it’s possible some are also using it to protect their savings.
Amid All This, India Declares War on Cash
In a higher-profile move, Indian prime minister Narendra Modi did what academics and bankers have wanted to do for some time — by banning high-denomination banknotes. The sudden removal of India’s 500 and 1000 rupee bills aims to combat the usual scapegoats of crime and tax evasion, but it also removed over 85 percent of India’s physical cash value.
In a country which also has the world’s highest unbanked populations, that’s a lot.
It’s all part of the so-called “War On Cash”, as governments find new reasons to remove physical cash from circulation. So far several officials and central bankers have tested the waters with statements claiming high-denomination cash has utility only in criminal activity. Bitcoiners, however, strongly disagree.
India has since seen long lines at ATMs, numerous protest and complaints… and a new interest in bitcoin. Some OTC traders on platforms like LocalBitcoins were charging over $900 USD per BTC, suggesting that interest is also leading to high demand.
Can We Thank Trump for This Too?
“Experts” predicted Donald Trump’s unlikely victory in the U.S. presidential election on 8th November would send stocks crashing and defensive assets like gold soaring. Like many other expert predictions in 2016 though, the opposite happened.
The Dow soon hit record highs as investors and Wall Street realized that a Trump presidency will likely not cause armageddon, but instead be business-friendly and involve lower taxes in some form.
That said, the gold price also rose post-election and, so has bitcoin. So it’s entirely possible there is a Trump factor in the recent surge.
Since none of the above situations show signs of changing any time soon, it’s possible bitcoin’s bull could keep charging. Or not. As always, the only certainties in bitcoin is that it’s unpredictable and not fully understood. Using platforms that allow price hedges in either direction is always a good idea.
Are you HODLing or would you like to take your current gains and run away? Let’s hear your thoughts in the comments.
Image courtesy of Pixabay.