Digest of economic news on bitcoins

All of a sudden this year bitcoin has become the palladium of stability on the back of social and economic surprises. Different factors have led to a significant increase in bitcoin price this year. One of the first reasons is the precarity of the Chinese market, for which reason bitcoin acquired a new status - a serene harbor in the raging ocean of fiduciary finance. Brexit which happened recently only strengthened positions of bitcoin in the new status.

However, there are other, not so obvious reasons pushing the bitcoin price upwards which, according to estimates of Forbes, can lead to a threefold escalation of bitcoin transaction cost this year.

Forbes refers to the report of the British company Juniper Research which specializes in detection and support of high-growth market segments, and according to its forecasts, general sum of bitcoin transactions will exceed 92 billion dollars by the end of the year, this will indicate a 240% growth compared to the results of 2015 when the turnover was estimated 27 billion dollars.

Trump, Brexit and other earthquakes

During the Brexit referendum the price of bitcoin reached $780. The decision of the United Kingdom to leave the European Union threw markets off their economic strides pushing alternative assets upwards. The analysts of the British broker IG Group suggest that by December the price of bitcoin can go up to $900. The head of the Analytics department of IG Group Chris Bushe and the analyst Josh Mahony think that the bitcoin price is likely to go up by 35-40% compared to today’s rates.

According to the message of Bloomberg news agency, last week the volatility of pound sterling surpassed that of bitcoin for a while. On the back of the British pound sterling, which demonstrated the most negative dynamics towards a dollar among 31 world currencies this year, bitcoin can definitely be considered a reliable investment.     

However, economic shocks are highly likely to affect other currencies beside european ones. According to the analysts’ forecasts disclosed by BBC, possible victory of Trump in the presidential election will be like an earthquake for the world economy and will significantly increase political and currency risks of the USA. If we believe the experts’ forecasts, the rise of Trump to power will have more serious consequences than the United Kingdom leaving the European Union or battles in the South China Sea. The Economic Development Department of the USA ranked the consequences of Trump’s victory in the election 12 points out of 25 on the economic destabilization scale - the same points were given to terrorist attacks of ISIS. Though, not to be too alarmist we should note that the chance of Trump’s victory is much lower. This research only shows that there are no invulnerable currencies - both pound sterling and the dollar can unsettle in certain circumstances.

Bitcoin halving and the currency rate

Bitcoin has just been halved, this means that the number of bitcoins released was cut in half, therefore the growth rate of the currency reserves decreased. This trend is completely opposite to what is happening to fiduciary currencies with which bitcoin is traded in pairs, in consequence of which many bitcoin enthusiasts expect the bitcoin price to go up compared to fiat currency.

Brazilian gold and bitcoin

Over the first half of 2016 the bitcoin trading volumes in the cryptocurrency exchange of Brazil have surpassed the figures of cash gold in the stock exchange of Sao-Paulo (BM&F BOVESPA). According to Fee.org, over the first half of 2016 the bitcoin trading volumes in special cryptocurrency exchanges surpassed 164 million reals (about 47 million dollards) while the aggregate number of registered gold purchase contracts in the Stock Exchange of Sao Paulo, the biggest exchange of the Latin America, accounted for about 153 million reals (around 44 million American dollars).

Moreover, in June the bitcoin trading volumes exceeded contracts on precious metals at least twice which proves the unprecedented interest towards a cryptocurrency in Brazil.

Despite that in the world the gold trading volumes are still much higher than that of a bitcoin, the case of Brazil witnesses to that bitcoin is more frequently considered by investors as an attractive option of placing assets.

The analysis of graphs promises rapid growth

The analytical company MarketWatch has recently published a report about that the year 2016 was successful for bitcoin bulls, and the cryptocurrency has again reached the two-year old growth indices. The technical analysis of the growth graphs gives hope and, according to experts, witnesses to that the bitcoin price will continue to increase. According to the major market analysts of MKM Jonathan Krinsky, this existing pattern is a consequence and a follow-up of long consolidation period and it is promised to be a continuous trend rather than a one-time bounce. On the graph one can see the break-off point, and taking into account the current condition of technical indicators the chances of going up are much higher, analysts of MarketWatch say.

The currency market reflects reality and currently is the best indicator of economic fundamentals. No one knows for sure what indicators bitcoin can reach this time, considering all uncertainty factors beyond control of strict mathematic calculations, however, the occurred halving, worldwide economic trends and technical analyses of the currency rate allow us to suggest that we are currently at the beginning of the upgoing wave. By the time of publication the cryptocurrency is being traded for 674 U.S. dollars.