This week on Planet Bitcoin - 17 June 2016

Friday 17 June 2016

TL;DR Moon

And so it comes to pass, the much-anticipated and hoped for Halving Rally. The last week has seen some pretty stellar gains from bitcoin. 

Chart

As a quick recap, this time last week we were trundling along on the $580 line, having already made some impressive gains the previous fortnight. The bump above $600, when it finally came, was decisive, and from there the rise to $700 took just 36 hours. A spike to around $720 was followed by a predictable pullback as traders took profits, and a moment of uncertainty as a brief loss of confidence saw a fall to the $650s again. But that was low enough: the market viewed that as distinctly undervalued. $700 was passed again on Thursday, briefly hitting $750 (BitStamp) before settling back in the $730s to draw breath. Another rise to touch almost $780 was followed by an epic crash, at the time of writing. It’s worth noting that the main action is coming from the big Chinese exchanges BTCC, Huobi and OKCoin, with Bitfinex providing the most liquidity of the western exchanges.

We’re now in unchartered territory and what comes next is anyone’s guess. The only time bitcoin has seen these levels is during the last bubble, at the very beginning of 2014. A halving event has never occurred when the markets are so developed or liquid, and when mining infrastructure is so advanced. How all of this will affect things over the coming month cannot be predicted. One thing that’s practically certain is a high degree of volatility over the coming weeks.

Brexit warning

Obviously hype around the Halving is helping drive the price, but there are other factors, too. The global economy has been doing a fast rethink on the news that the UK might seriously be considering jumping ship from the EU. Over the past week the polls have shown the Leave camp overtake Remain, though the bookies (often more reliable than pollsters) still see an outcome for Remain.

That has had global implications, with the Bank of England warning the EU referendum is the ‘largest immediate risk’ facing global financial markets. Yields on 10-year German bonds turned negative for the first time on Tuesday as savers looked for a safe haven. US Federal Reserve Chair Janet Yellen also stated that the possibility of Brexit was part of reason the Fed kept interest rates on hold. Sterling is down around $1.40 - with a lot more downside possible if uncertainty persists, and a sharp drop highly likely on a Leave verdict. All of this uncertainty is likely giving some exposure to bitcoin, which tends to benefit (along with gold) when the traditional markets falter.

In other news, WAVES is now finally hitting exchanges for the first time - an interesting proposition at the current point in the bitcoin cycle. On the one hand, everything else tends to suffer when bitcoin is heading up; on the other, it’s a new project and a new market, which tends to be attractive to traders seeking to put booked profits in a new home.


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