Bitcoin Maintains Strong Rise Amid Differing Theories
JUST when critics thought Bitcoin will not be able to hurdle the obstacles brought about by launch of new digital currencies and hacking here and there not to mention issues about its transaction capabilities, it proved it can weather the storm.
From October 1 to October 29, Bitcoin has had a very impressive run, rising from $600 to $720, representing a 19 pct increase in such short span.
Year to date, Bitcoin has surged from the $350 mark starting February this year, making a quick rise to the $800 last May, then settling an average $600 to $700 from July to September.
As with the usual trend in price shifts, nobody knows exactly why Bitcoin is rising the way it is as of presstime. As for this latest price rally, analysts bring to the table two of several underlying possibilities making the rounds in the finance market.
Hedge vs Chinese currency
China’s currency, the yuan, has dropped 5 percent versus the US greenback during the past months, hitting 6-year lows. A good number of traders in China use bitcoin, as a hedge against looming yuan weakness, based on a report by Bloomberg. Currency hedging in the Chinese market is very complex in terms of its capital controls, making freely traded bitcoin very appealing.
Another reason is that more and more Chinese are turning to bitcoin as the government becomes very stringent in its wealth management policy.
According to Needham and Co, it lifted its price target for Bitcoin, from $650 to $845, citing improved stability and liquidity. The cryptocurreny’s well-noted volatilty is currently about the same as that of oil, while its liquidity can be compared to that of mid-cap stock in the United States.
In the midst of different opinions surrounding Bitcoin’s mystery, as with other markets, perception is as crucial as reality. Right now, virtual currency players are happy about what they are seeing for Bitcoin.