What’s With the bitcoin Prices?
In this article I will look at some recent trends in the global growth of bitcoin prices. As you will no doubt be aware, the Chinese government recently released regulations limiting foreign ownership of digital currency. This created a massive problem for traders who had been trading in large quantities using their mainland currency. The solution offered by the authorities was to introduce a virtual currency equivalent, or a virtual stock market. This new system, known as the China Virtual Exchange (CCX), quickly became the world’s second largest virtual exchange.
With this backdrop, we have seen a sharp increase in the number of traders who are switching their investment over to this new service. In July, the virtual exchange experienced a spike in activity, as traders rushed to buy up the popular virtual asset. Then in August, the government cracked down on the virtual currency, restricting individual citizens from trading it for speculation purposes. Although these restrictions temporarily hindered liquidity, sentiment quickly rebounded and the number of traders increased again.
Trends may also indicate that the Chinese government may be contemplating additional measures to limit the circulation of bitcoins. The government has previously indicated that it would restrict the maximum number of trades that can be made from domestic currency to those made in bitcoins. Additionally, it has publicly stated that it does not plan to implement any foreign exchange rate manipulation, a policy that signals an intention to retain the present peg for the Chinese Yuan. Furthermore, there is widespread belief that the central bank will eventually replace the current paper money with a variety of virtual currencies.
The following chart shows the evolution of the price of bitcoins over the past year. While the number of traders continues to rise, it is unlikely that they will ever reach the heights of the late 2021 highs. Nevertheless, it is clear that there is a marked increase in trading between April and June of 2021. This is due to a number of factors. All the major news agencies released reports confirming the existence of a new digital currency, with some even reporting that the first bitcoins will be released sometime around the end of February 2021.
One of the most widely publicized events regarding the potential introduction of a bitcoins alternative currency is the release of the pdf file “bitcoin Scrapbook”. The book was created by someone going by the name of “Winkpool” and can be downloaded free of charge. It provides extensive background on the history of the Mt. Gox incident, the subsequent fallout and the future of the bitcoin exchange rate. The publication has generated a lot of media coverage including the Washington Post, CNN, CNBC, The New York Times and Business Insider.
The bitcoin transaction log shows that there were nearly nine thousand transactions completed throughout march and April of this year. About ninety-five percent of these transactions were concentrated in the US dollar spot market. About half were in the European Euros zone, while about ten percent was in the Asian Pacific Rim zone. Based on the information in the transaction log, it appears as though the most activity during this period occurred in Australia, Canada, Switzerland, Japan, Sweden, New Zealand, Ireland, Hong Kong, Singapore and China. Some of the more interesting findings from the log include a very low volume of trading during the first two weeks of April.
While the bitcoin prices didn’t take a drastic dip following the publication of this report, they have since gained in value. This can be attributed to speculation that investors were waiting for the announcement of a new virtual currency to take the place of the existing ones like the US dollar, Euro, Japanese yen and Swiss franc. The fact that there was a significant decrease in trading is interpreted to mean that traders were not really enthusiastic about this new venture. The Australian dollar has also dropped in value since the report came out. Other currencies may follow suit, especially when the Chinese government makes an official statement on the release of their own version of the virtual currency.
It is not known what the Chinese government will announce, but since the past few years, many have predicted that they will eventually move to digital currencies. In the meantime, investors who have purchased a large amount of the little yellow metal are waiting for its rise in value. Many of them are holding onto their bit gold for the future, even as other nations develop their own Cryptocurrency such as the US dollar, Euro, Japanese yen, Canadian dollar and Swiss franc. Traders are optimistic about the potential of the new technology in being used for money transfer and settlement, and they are anticipating an increase in prices when the new technologies are introduced to the public. Even though there is still some skepticism regarding the future of the decentralized autonomous organization, the current status of the bitcoin prices reflects this fact.