Bitcoin is back at price levels only seen at the top of the 2013 Bitcoin peak. The ceiling is broken and a floor is being installed. its been explosive, but this time it feels like its holding steady.
$1000USD bitcoins are in the house.
Sunday 12 February 2017
Bitcoin is Putting in a Wall of Buys at $1000
https://www.bitfinex.com/stats
http://bitcoin-analytics.com/
Saturday 11 February 2017
Bitcoin Proliferation is Good for Chinese Macro
The Bloomburg propaganda machine has been working overtime lately. They promote articles claiming that China is pulling the market down. The language is clear when they publish articles with plunge, crash, and free fall, despite the fact that bitcoin has been steadily rising over the last year and remains near all-time highs. They Promote fud so frequently that it is having a diminishing effect that people are charting.
It doesn't take long to see why they are untrustworthy, they have major support from organisations whom have a vested interest against Bitcoin, but let's also take a step back and look at the macro reasons. Why is it many American media outlets keep talking down bitcoin and why the Chinese aren't as threatened by bitcoin as one might think.
The Chinese are the major source or bitcoin repression according to American media. however China have been consistently trading bitcoin at higher prices than elsewhere in the world for at least the last two years. The capital flight drum gets beat here as a reason. Lets talk about the chinese macro economic environment.As you know are an exporting economy.They do a lot of their business with international transactions. These are often made in dollars, are slow and costly. They also have more people than any other country, you can see why they don't want to use someone else's a dollar. you can also see why a world currency would able to be transferred easily across borders for trade appeal to them.
In the past China has taken advantage of a weak currency which has given it a competitive advantage on its exports. this has helped build up their economy quickly. Now they are going to float their currency. This is in part because the IMF and WTO wanted them to do this to become part of the world currency call the SDR. (yes those are the world bankers acronyms, equivalent to advance crypto jargon, IMHO they are worse) China need to prove a stable currency for the IMF so they have held their currency level with a basket of currencies for many years. They have done this successfully but it just so happens that the USD has been going up out of line with their main trading partners and other countries in the SDR. Despite what many people think the Yuan is not in "free fall".
China have the largest foreign exchange reserves of any country. They own more USD than anyone else and more of other countries money as well. This is generally made up of government bonds built up over the last twenty years of trade surpluses and currency devaluation. So now that they want a stable currency, they can use this reserve to do it. Selling off foreign currencies for Yuan when they get to high against the Yuan or when the yuan needs support. China is holding a lot of USD, more than any other foreign currency so they made money out of the USD gain. They can also potentially influence a drop in the dollar. Scary I know, but 3 trillion in reserves, makes a pretty significant impact on a $15T a year FX market.
So what is the threat of bitcoin to China. It is such a small thing at the moment with around $15billion total market cap. What could be the potential risks of a prolific bitcoin to the governments agenda there?
The Chinese government already struggles to control its financial system. They try to impose strict rules on reporting and deposit rates, have recently removed dozens of corrupt officials and yet they still have real estate bubbles and stock market crashes. With the traditional system central administration is actually quite difficult. I would suggest that blockchain like technologies might actually provide a solution for central planners as the allow more transparency of transactions and better potential oversight. Bitcoin is not excluded from this.
Bitcoin is also practicle for exporting. It is not linked to any nation, making it neutral and great for bi-lateral agreements. China being first to adopt it would give it an advantage over its competitors and provide a moral high ground. The many emerging countries which China is actively trading with as part of its strategy can easily get on board. Countries with unstable politics, often with anti-American factions, will have no issue, and countries with no infrastructure but people with smart phones can leapfrog to the latest methods.
Further, with all of its foreign funds, the Chinese could gain a lot of control over bitcoin. With the potential of no longer needing their foreign funds to stabilise the Yuan. 1. they could make bitcoin stable 2. the could make the USD less stable. 3. they could push up the bitcoin price in foreign currencies without anyone really knowing,
All of this type of thing requires a market capitalisation in bitcoin, and transaction volumes, many factors higher than we currently have , but given this is sorted, it is al quite logical. Infact what happens in a financial crisis where the USD starts to drop before the Chinese have got their money out? The USD could restrict capital flight in some ways and in that case they may be left with no other method to repatriate their funds.
The speculation is fun, and I don't see a reason why the government of China would want to go down a path of repressing the bitcoin technology. I think the anti-communist libertarian idea of bitcoin is not the full picture. Bitcoin and certainly blockchain like technologies are more suited to communist type thinking than the current financial system. Chinese people are very quick to integrate new technologies into thier lives and I think we should give them some respect.
It doesn't take long to see why they are untrustworthy, they have major support from organisations whom have a vested interest against Bitcoin, but let's also take a step back and look at the macro reasons. Why is it many American media outlets keep talking down bitcoin and why the Chinese aren't as threatened by bitcoin as one might think.
The Chinese are the major source or bitcoin repression according to American media. however China have been consistently trading bitcoin at higher prices than elsewhere in the world for at least the last two years. The capital flight drum gets beat here as a reason. Lets talk about the chinese macro economic environment.As you know are an exporting economy.They do a lot of their business with international transactions. These are often made in dollars, are slow and costly. They also have more people than any other country, you can see why they don't want to use someone else's a dollar. you can also see why a world currency would able to be transferred easily across borders for trade appeal to them.
In the past China has taken advantage of a weak currency which has given it a competitive advantage on its exports. this has helped build up their economy quickly. Now they are going to float their currency. This is in part because the IMF and WTO wanted them to do this to become part of the world currency call the SDR. (yes those are the world bankers acronyms, equivalent to advance crypto jargon, IMHO they are worse) China need to prove a stable currency for the IMF so they have held their currency level with a basket of currencies for many years. They have done this successfully but it just so happens that the USD has been going up out of line with their main trading partners and other countries in the SDR. Despite what many people think the Yuan is not in "free fall".
China have the largest foreign exchange reserves of any country. They own more USD than anyone else and more of other countries money as well. This is generally made up of government bonds built up over the last twenty years of trade surpluses and currency devaluation. So now that they want a stable currency, they can use this reserve to do it. Selling off foreign currencies for Yuan when they get to high against the Yuan or when the yuan needs support. China is holding a lot of USD, more than any other foreign currency so they made money out of the USD gain. They can also potentially influence a drop in the dollar. Scary I know, but 3 trillion in reserves, makes a pretty significant impact on a $15T a year FX market.
So what is the threat of bitcoin to China. It is such a small thing at the moment with around $15billion total market cap. What could be the potential risks of a prolific bitcoin to the governments agenda there?
The Chinese government already struggles to control its financial system. They try to impose strict rules on reporting and deposit rates, have recently removed dozens of corrupt officials and yet they still have real estate bubbles and stock market crashes. With the traditional system central administration is actually quite difficult. I would suggest that blockchain like technologies might actually provide a solution for central planners as the allow more transparency of transactions and better potential oversight. Bitcoin is not excluded from this.
Bitcoin is also practicle for exporting. It is not linked to any nation, making it neutral and great for bi-lateral agreements. China being first to adopt it would give it an advantage over its competitors and provide a moral high ground. The many emerging countries which China is actively trading with as part of its strategy can easily get on board. Countries with unstable politics, often with anti-American factions, will have no issue, and countries with no infrastructure but people with smart phones can leapfrog to the latest methods.
Further, with all of its foreign funds, the Chinese could gain a lot of control over bitcoin. With the potential of no longer needing their foreign funds to stabilise the Yuan. 1. they could make bitcoin stable 2. the could make the USD less stable. 3. they could push up the bitcoin price in foreign currencies without anyone really knowing,
All of this type of thing requires a market capitalisation in bitcoin, and transaction volumes, many factors higher than we currently have , but given this is sorted, it is al quite logical. Infact what happens in a financial crisis where the USD starts to drop before the Chinese have got their money out? The USD could restrict capital flight in some ways and in that case they may be left with no other method to repatriate their funds.
The speculation is fun, and I don't see a reason why the government of China would want to go down a path of repressing the bitcoin technology. I think the anti-communist libertarian idea of bitcoin is not the full picture. Bitcoin and certainly blockchain like technologies are more suited to communist type thinking than the current financial system. Chinese people are very quick to integrate new technologies into thier lives and I think we should give them some respect.
Subscribe to:
Posts (Atom)