Bitcoin
Huge Dump in Bitcoin’s Price May Not be Evident Again
Bitcoin has exhibited a pattern in the past which can be said to be booms and busts in its price. There have also been similarities between the percentage of increment and decrement between certain years.
However, Bitcoin may not decline by 85 percent as is evident in the past, reports Bloomberg on June 13, 2019.
Similarities in Bitcoin’s Performance in the Past
Per the report, Bitcoin surged from $0 in 2009 to almost $150 in 2013 but later dumped 60 percent in price only to rebound to $1,150. In 2015, it declined by 85 percent to $175 which is considerably higher than its price in 2013. Similarly, it surged to $20,000 in late 2017 only to dump by over 85 percent in December 2018.
Therefore, if one considers the pattern, they can expect a sharp rise in the virtual asset’s price between $60,000 to $400,000 before it also dumps by 85 percent. While that may sound pessimistic, there are reasons to believe that the spike and sudden crash in price will not be the case this time around. So far, Bitcoin is currently trading at $8,600 and its year-to-date high is $9100.
Reasons Bust Percentage May be Lower
On the other hand, the previous performance might not be evident since Bitcoin’s market cap is not $152 billion which is larger than its $1 billion and $3 billion market cap in 2013 and 2015 respectively. Moreover, more people have ventured into space as well as companies. An instance is the case of JP Morgan who launched its own cryptocurrency.
Nonetheless, crashes can still be expected since volatility is prevalent even in crypto assets that have no value. However, they may not be as significant as in the past where the dump amounted to 80 percent. What can be expected, is something around 20 percent or less.
Bitcoin’s Options Market
While throwing more light on what may have led to its conclusion, Bloomberg made reference to the Bitcoin options market. According to the media, when cryptocurrencies prices in late 2017 were similar to what’s happening today, the $10,000 one-month Bitcoin calls had an active trading and implied volatility of 300 percent.
The latter meant paying $2,200 just for the right to buy Bitcoin at $10,000 when its price is $8,000. Another factor that was a consideration is the correlation between Bitcoin and the S&P 500 Index.
Generally, crypto assets correlate with the index due to their performance in good economic times with support for innovation and inexpensive capital.
Bitcoin
Central African Republic Becomes First African Country To Adopt Bitcoin As Legal Tender
The new bill provides a framework for use of cryptocurrencies in smart contracts, payments systems, online trade, and all electronic transactions alongside the CFA franc currency.
Bitcoin continued to garner attention globally as a national legal tender with Central African Republic becoming the latest suitor. President Faustin-Archange Touadéra signed the bill into law on Wednesday and his chief of staff Obed Namsio hailed the move as one that could forever change the economic fabric of a country that has been embroiled in rebel violence for many years now.
Namsio said the bill was supported by the president because it would improve the citizens’ status. He added it would open up new economic opportunities for the landlocked country. The new bill provides a framework for use of cryptocurrencies in smart contracts, payments systems, online trade, and all electronic transactions alongside the CFA franc currency.
“This move places the Central African Republic on the map of the world’s boldest and most visionary countries,” he said.
Traders will also be capable of paying taxes with crypto and the finance minister Gourna Zacko who introduced the bill, believes it will ease cross-border transfers that have become increasingly difficult to do. These transfers will now become very cheap. Citizens will also be capable of undertaking legal financial transactions in the mainstream financial realms using crypto, and without necessarily going through middlemen banks. Cryptocurrency exchanges will not be taxed.
The bill has clauses that prescribe up to 20 years of imprisonment and a fine of between 100 million to 1 billion CFA francs for anyone who breaks the crypto law.
With a per capita income of only 750 USD per year, the country is one of the poorest in the region and world as a result of years of conflicts and war. This is despite having a vast amount of gold and diamond reserves.
The country would, however, have to pursue an aggressive Internet coverage agenda to make this plan effective. It currently has an Internet penetration rate of just 7.1 percent and 355,000 Internet users out of a total population of 4.97 million people.
It is not clear if and how the new move would help alleviate the country’s ailing inflation or GDP. Inflation has increased from 2.7 percent in 2019 to 3.3 in 2021. The country’s GDP also flipped to the negative last year at -0.6 from a 3.1 in 2019. Despite relying heavily on agriculture and mining, illegal gold and diamond exports undermine government revenue. The country is also embroiled in bad political and economic decisions, conflicts, and insecurity.
The bill that governs use of cryptocurrency as legal tender in the country was unanimously adopted by the parliament last week. However, the move was not approved by the Bank of Central African States (BEAC) which governs the Central African CFA franc regional currency used by the country and about 14 others. The franc is tied to the Euro and largely controlled by the West. Two ministers said the move to adopt Bitcoin as a national currency was a serious offense.
The move was also criticized by former Prime Minister Martin Ziguele who said it was not a priority for the country, and that it was undermining the CFA franc. The decision could also be challenged in court by some legislators.
Bitcoin
J.K. Rowling and Elon Musk Engage in Twitter Conversation About Bitcoin
Just recently, the CEO of SpaceX – Elon Musk took to Twitter to reveal his current holding of Bitcoin. The conversation ensued during an effort to educate British author and film producer – J.K. Rowling on the subject of cryptocurrencies. Following a tweet originally referred to CoinDesk’s senior reporter – Leigh Cuen by the Orator of the Harry Potter fiction on Saturday, for an explanation to bitcoin’s operability.
J.K. Rowling subsequently received Musk’s reply among several others from Bitcoin’s advocates and cynics alike; such as the co-founder of Ethereum and Bitcoin Magazine– Vitalik Buterin, among many others. Notably, the author’s tweet drew some attention to the tune of 2,800 replies, as at the time of writing.
Furthermore, the co-founder and CEO of Tesla, Inc., emphasized that the bulky issuance of currencies by the central banks of various economies is making the digital currency – Bitcoin, more solid in juxtaposition to fiat. Musk also went on ahead to convey his views towards digital money as being positive, even though he currently owns a quarter of a Bitcoin as stated in his tweet that reads;
“I still only own 0.25 Bitcoins btw.”
Yet, Cuen replied Rowling with a reassuring statement while providing her with guides to sample use-cases of Bitcoin. Cuen stressed this in a tweet with the message;
“Hi! My D.M.s are open if you want to chat w/out onlookers. The very short version is: Bitcoin is money fueled by a community of contributors. There is no king or central bank in charge. There are countless stories we can use to explore the ethics of a world w/global currency.”
Albeit, Rowling expressed her discontent with regards to the explanations she received, as her curiosity rapidly became debased by the myriad of responses she received. She disclosed her uneasiness towards the topic in question – with a bit of sarcasm while tweeting the following;
Another noteworthy reply is that of Vitalik Buterin, who added that;
“It is a digital currency. There’s ~ 18m units of it. It is not backed by anything, it’s just valuable because it is, like collectibles. There’s a network of computers (which anyone can join) that maintains a decentralized global excel spreadsheet of how many coins each person has.”
Although, Rowling might have admitted being woozy before publishing these tweets, however, her views on the digital currencies and Bitcoin are unlikely to change when she becomes sober or in the foreseeable future.
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