Categories: Bitcoin Politics

Markets Weekly: Could Central Banks Spark a Bitcoin Rally?

Click here to view original web page at www.coindesk.com

Following mid-November's price spike, the bitcoin markets have resumed regular service. The price has dropped slightly, while trading volumes have reverted to more commonly observed levels.

The price started last week at $385, according to the CoinDesk BPI, and closed the week at $366 – a fall of 5%.

Trading volumes fell precipitously by 39% last week compared to a week earlier. The number of coins that changed hands across all exchanges tracked by Bitcoinity stood at 3.68 million – down from 5.99 million over the previous seven days.

CoinDesk BPI 17th-23rd November

Last week's giddy heights

The declining price and decreased trading activity last week is in stark contrast to the previous week's bidding frenzy. The price then achieved a high of $458 on 13th November.

Market watchers salivated as they anticipated a price breakout. The Nasdaq's resident blogger Martin Tillier, who has plenty of experience in the forex markets, advocated a bullish interpretation of the upswing. He pointed out that the Dollar Index had achieved a one-month peak, thus was due to decline. This meant that bitcoin traded against the dollar would gain in value.

"That could well be the short squeeze to end them all," Tillier wrote in his column last week, predicting that a breakout would take the price back up to $450 and beyond.

It was not to be, however. Instead, the bitcoin price has reverted to trading in the $350-$370 band, putting paid to hopes that last week's rally was the start of a new bull market.

Tillier's analysis remains optimistic, even in this trading band. In the less optimistic scenario where the price doesn't rocket, he wrote:

"Breaking that [downward trend] depends on establishing a new pattern of higher lows and higher highs. If BTC/USD holds above the $350 point ... it clears the way for that pattern to take hold."

Could central banks boost the bitcoin price?

The bitcoin price may obtain succour from an unexpected source in coming days: China's central bank. Even more incredibly, the central banks of Japan and Korea are also helping to pile upward pressure on the bitcoin price.

It's not that East Asia's central bankers have decided on self-obsolescence, en masse. They're doing something more predictable – firing the opening shots of what's widely seen as a new currency war in the region.

It all started when the Bank of Japan cut interest rates unexpectedly at the end of October, helping to push the price of the yen down, relative to the US dollar. This move boosted its exports.

Now Japan's competitors, Korea and China, have followed suit. The People's Bank of China announced rate cuts last week, apparently to check the price of the renminbi relative to the yen.

As Nasdaq's Tillier has pointed out, it helps to look at both sides of a currency pair, even if you are a bitcoin obsessive.

Bitcoin-yuan trading accounted for 76% of trading volume in the last six months, according to Bitcoinity. If the yuan is going to get cheaper, then bitcoin grows in value.

Of course, the usual caveats about BTC/CNY trading volumes from the major exchanges dealing in that pair apply. While the trading volume figures are likely amplified as a result of their no-fees trading model, it's not often that bitcoin bulls can celebrate the monetary policy moves of central banks.

US Marshals worry bitcoin markets... again

Possibly pulling the price in the opposite direction, however, the US Marshals Service (USMS) has announced an auction of 50,000 bitcoins that belonged to accused Silk Road mastermind Ross Ulbricht in December.

The agency is using the same format as the July auction of 30,000 coins that was won by venture capitalist Tim Draper.

Is another auction going to help or hinder the bitcoin price? Let's review what happened in the July auction. The run-up to the bid submission deadline saw the price rise gradually, from $444 on 18th May to $579 on 26th June. The auction took place on 27th June.

Rumours swirled in the following days, as the USMS began a slow drip of information about the auction. On 1st July, the agency said the coins were won by a single bidder – Draper as it turned out, who outed himself the following day.

Bitcoin markets appeared distinctly nonplussed by Draper's unveiling, if the price is any indicator. The price hovered in the $600s for much of the month, only to begin a steep downward decline in August. That slide hasn't really stopped since.

So another auction – this time with two-thirds more coins on offer – may not be the sort of news traders hoping for a much-needed rally want to hear. Tim Draper has announced that he will bid this time too.

Disclaimer: This article should not be viewed as financial advice. Please do your own extensive research before making investment decisions.

Markets WeeklyPBOCPricesUS Marshals Service

The price started last week at $385, according to the CoinDesk BPI, and closed the week at $366 – a fall of 5%.

Trading volumes fell precipitously by 39% last week compared to a week earlier. The number of coins that changed hands across all exchanges tracked by Bitcoinity stood at 3.68 million – down from 5.99 […]

cinerama

Illuminati, Mason, Anonymous I'll never tell. I can tell you this, global power is shifting and those who have the new intelligence are working to acquire this new force. You matter naught except to yourself, therefore prepare for the least expected and make your place in the new world order.

Disqus Comments Loading...
Share
Published by
cinerama
Tags: policy

Recent Posts

Authorities Bust Illegal Crypto-Mining Lab In Nuclear Power Plant

Ukrainian news media is reporting that last month an illegal cryptocurrency mining operation was discovered and confiscated on the site… Read More

1 hour ago

Why Mark Carney Thinks The Dollar Can No Longer Be The World’s Reserve Currency

While Jerome Powell's highly anticipated Jackson Hole speech was, in the words of Brean Capital's Russ Certo "underwhelming and anti-climatic",… Read More

1 hour ago

Bitcoin Transactions Lead to International Drug Trafficking Ring’s Arrests

Criminals often express their favoritism toward cryptocurrencies. The perceived privacy and anonymity associated with this payment method makes for an… Read More

1 hour ago

Initiative to Curtail Negative Interest Rates Gains Traction in Germany

Negative interest rates, a common occurrence in Europe these days, are unpleasant for both banks and clients. And financial institutions… Read More

1 hour ago

Analyst Says Bitcoin Is About to Seriously Impress Us

As of late, bitcoin – the granddaddy of all crypto – is once again experiencing small bursts of bearish behavior.… Read More

1 hour ago

Gloomy Stock Market Faces New China Taunt: We’ll Get ‘Last Laugh’

A gloomy stock market must wrestle with China's latest taunt, in which it warned it would "fight to the end"… Read More

1 hour ago

This website uses cookies. We use these cookies to collect data about your interaction with our website for the purpose of continuously improving your experience with our site. For more information we encourage you to read our privacy policy.

Read More