Bitcoin price has become the topic of discussion among all leading media outlets. With the cryptocurrency’s price reaching an all-time high of $1281, it has surpassed the price of gold. A troy ounce of gold is currently valued at around $1,233, whereas the “digital gold” registers a value much higher than that.
Bitcoin seems to have broken the jinxed price barrier, by rising beyond the earlier high, experienced right before the collapse of Mt Gox. Leading publications and cryptocurrency analysts have attributed the increase in price to an exceeding demand for Bitcoin in the Chinese market. The Chinese central bank’s recent crackdown on the country’s Bitcoin exchanges has led to a severe disruption in trading activities.
Almost all Chinese Bitcoin exchanges have stopped offering margin trading and lending features, and they also have frozen Bitcoin withdrawals until March 15. It is still unclear about whether they will be sticking to the timeline. While these exchanges take their own sweet time to implement the required KYC and AML systems, the liquidity of Bitcoin in the market has taken a hit.
With a significant portion of the cryptocurrency owned by traders locked up on these exchange platforms, those looking forward to buying the digital currency are forced to pay a premium. Further fueling the price rise is the hopes for the Bitcoin ETF to be cleared by the SEC.
If Winklevoss Twins receive the necessary clearance, then it will pave the way for not just the Gemini platform but also other cryptocurrency and financial platforms to float Bitcoin ETFs. These ETFs will become readily accessible to people, in turn raising demand and the price. Those optimistic about the approval have started to buy into the digital currency with the intention of profiting soon. Even institutional investors are on a buying spree, fueling current demand and hence the price rise.
The ETF issue will see some sort of resolution, positive or negative by March 11, 2017. At the same time, if the Chinese exchanges stick to their declared timeline and enable Bitcoin withdrawals on March 15, 2017, then the pressure may ease on the market. A “NO” signal by SEC on the Bitcoin ETF, combined with some relief to Bitcoin traders in China, will probably lead to a short-term fall in the cryptocurrency price. The fall will recover as soon as the trading resumes normal levels across the market.
Ref: BBC | Bloomberg | Image: NewsBTC