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The Reason For Bitcoin's Recent 60% Surge Revealed
It was precisely two months ago, on September 2nd, when we explained that as a result of China's recent currency devaluation, in order to mitigate the inevitable capital outflows that such an FX move would unleash, China was "scrambling to enforce capital controls" in order to prevent the exit of hot (and not so hot) money from China's economy.
We then said the following to explain why "this is great news for bitcoin":
Which is why we would not be surprised to see another push higher in the value of bitcoin: it was earlier this summer when the digital currency, which can bypass capital controls and national borders with the click of a button, surged on Grexit concerns and fears a Drachma return would crush the savings of an entire nation. Since then, BTC has dropped (in no small part as a result of the previously documented "forking" with Bitcoin XT), however if a few hundred million Chinese decide that the time has come to use bitcoin as the capital controls bypassing currency of choice, and decide to invest even a tiny fraction of the $22 trillion in Chinese deposits in bitcoin (whose total market cap at last check was just over $3 billion), sit back and watch as we witness the second coming of the bitcoin bubble, one which could make the previous all time highs in the digital currency, seems like a low print.
At the time of this forecast, the price of bitcoin was highlighted with the red arrow.
And while we were confident it was indeed Chinese capital "mobility" using the bitcoin channel that was the impetus behind the nearly 60% surge in the price of the digital currency in past two months to fresh 2015 highs, moments ago we got the closest thing to a confirmation when Bitcoin Magazine reported that "China is leading the charge, with the price trading anywhere from $10-$15 above the rates on U.S. and European exchanges."
Bitcoin Magazine further adds that "China is experiencing unprecedented amounts of growth. On October 30th, Jack C. Liu, the Head of International at OKCoin, said, in a tweet, that it had been the “busiest day of the year @OKCoinBTC as #Bitcoin trades to 2015 high of $344. No clawbacks on futures, no downtime. Great day for us & industry.”"
Two days later, he went on to reveal that OkCoin had seen incredible demand for accounts on the exchange:
Incredible new user growth for @OKCoinBTC USD and CNY. Two dozen plus handling KYC and customer service. We can onboard within 24-48 hours.
— Jack C. Liu (@liujackc) November 2, 2015
And here is the validation that, just as predicted here two months ago, bitcoin has become the go-to asset class for millions of Chinese savers seeking to quietly and under the radar transfer funds from point A to point B, whatever that may be, in the process circumventing the recently expanded governmental capital controls:
While he didn’t provide any concrete numbers, he did comment last week on what was driving the adoption. “Some Chinese traders are expressing a view on the CNY exchange rate after the last devaluation and you have interest by mainland speculators to move to other assets after the stock market fallout,” he explained in an interview with Bitcoin Magazine.
Which again brings us back to our conclusion from two months ago:
... if a few hundred million Chinese decide that the time has come to use bitcoin as the capital controls bypassing currency of choice, and decide to invest even a tiny fraction of the $22 trillion in Chinese deposits in bitcoin (whose total market cap at last check was just over $3 billion), sit back and watch as we witness the second coming of the bitcoin bubble, one which could make the previous all time highs in the digital currency, seems like a low print.
As of this moment, the total value of bitcoin is up from the $3 billion two months ago to a little over $5 billion. That means the ratio of Chinese deposits (at around $22 trillion) to bitcoin, is down to a far more "conservative" 4,400x.
And now, again, imagine what could happen if these same Chinese depositors realize they have been lied about the non-performing loans "backing" their deposits and that instead of the official 1.5% bad debt ratio, the real number is really far greater, somewhere in the 20% ballpark as we will show shortly, suggesting major deposit impairments are no longer the stuff of Cypriot nightmares but just the thing hundreds of millions of Chinese depositors have to look forward to, and that they have just two possible choices to avoid said impairment: reallocating their savings into bitcoin or, of course, gold.
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Get screwed on stocks so putchur money somewhere safe.
Got it
What's Chinee for 201(k)?
Gold, silver, or bitcoin?
BTC will make new highs, some will get on board and some will wish they had...
Gold and silver are being held back while BTC seems able to float.
Hold gold.
HODL Bitcoin.
(95% of the above in gold)
50/50?
"TAFKADCRB" blesses your 50/50, because you contributed to my knowledge way back when (and you know a lot about BTC).
;)
ZH bitchez
It's a ponzi. Don't fall for it.
Wait for it to become WRC and then convert.
They will LET you invest in bitcoin, not gold/silver. The fake stuff....we are not good enough for the real stuff, only the central banks are good enough for gold/silver.
I am enjoying the bargain prices in PMs. I was affraid that I had run out of time to buy cheap silver back in 2010 and stopped buying untill late 2013. I have been happily loading the boat up. I will miss double digit silver when its gone.
If you believe a major monetary reset is to come, you should not ignore the price action of bitcoin during times of minor monetary turmoil.
what you guys run out of powder??? even if gold went up you'd never sell anyway just like when it was in the $1800's and ya'll sat on your asses
remember BTC is suppose to be dead right?? wake the fuck up or shut up
And when there is a blackout, grid down, you are going to glad you had your bitcoin folder. When the banks close and they take down the internet, you will bless you bitcoins. When the grid comes back and the entire bitcoin platform is wiped, you will be rich I tell you. RICH.
if the grid goes down, your bitcoins will be stuck in your little folder with no where to go.
Yes! ;-)
(Why not collect all three?)
The Chinese are getting their corrupt gains out of the country. What happens when the Chinese government starts checking tax returns and property holdings abroad? Do you understand that the USA is one of very few countries that taxes its citizens on money earned abroad. You cannot escape FATCA. The Chinese WILL chase this money, probably through the bitcoin paper trail. Then watch the Vancouver property price index (and the bitcoin value). PH
And imagine how much more effective Bitcoin is when you silence the blockchain as they say at silentvault.com or digitalcash.to
That's interesting, though I'd like to see more detail. After the epic fail that was MT. Gox, storing any BTC currency with an exchange is risky business. For the technology inclined bitcoin is pretty awesome. This is one area that the free market is staying miles ahead of government surveillance. We'll see how much meddling they can do with the stuff they got from dread pirate roberts.
Maybe they've already used it, I don't know.
Blair Masters of JP Morgan fame thinks bitcoin is great for bankers.
Hookers and blow too.
hmmm, Blair Masters?
Is she kin to the imfamous BLYTHE MASTERS of JP Morgan fame ??
/snark!
gotta love the newbies ;))
List of Bitcoin heists from Bitcointalk.org (up to 2012-13)
Further reading via Forbes here and here
This looks like a good time to start my Bitcoin Volatility Index triple-leveraged funds. May I reccomend investing at least 60% of your 401k in it? This isn't investment advice - but you're going to be frickin' RICH. Trust me.
GBTC
GBTC (Global Bitcoin Trust ETF) is a nice way to get some exposure. I've got some in tax advantaged accounts. Been a nice ride so far, had been accumulating all summer. Also own some with Coinbase (coinbase.com) -- it's a pretty easy way to buy BTC directly, and they're based in San Frani. Strapped in and ready for the G forces up.
BTC triple volatility?
You can trade well in excess of 10x-20x leverage in btc world on Chinese exchanges.
Forget Gold. Welcome to the 21st Century Yellowman.
We BitCoined some folks....
It's just a currency. Trade it if you want, or not whatever. It's certainly safer than USD, JPY or CNY or even the damn CHF. It can't be printed. It's not gold, but a wrench isn't exactly a very good hammer either no matter how many times you try it, and I have.
Well, it is not JUST a currency. Like the Internet in '92 was known to do little more than email, but then we learned it's much more than just email.
Bitcoin is a communication protocol and ownership transfer network capable of registering transactions with the following details: time, sender(s), recipient(s), amount, arbitrary metadata, conditions under which the transaction is executed. This looks modest, but in reality it allows building complex ownership transfer rules in form of smart contracts - ones that care not about jurisdiction or national borders. With metadata component one can treat units of bitcoin as stocks or bonds, with the irrevocable timestamping comes the power of registering assets like home ownership or notarizing documents with no third party notary public.
In reality what we witness being born is not JUST a currency, but in fact a whole new industry of programmable money for which BTC (the unit of account on Bitcoin network) is a carrier.
So you can't print bitcoins? Tell me again how they come into existence? Mining you say? So I was mining some documents on my printer yesterday. Oh that's called printing is it? Tell me the difference. You computer works through some mumbo jumbo coding (that somebody developed!) and out pops a bitcoin (a number). Wow, this I can trust. The whole thing is one step away from lunacy, but the government will not attack it because it wants you to trust digital money systems - until they don't.
Very concise yet detailed explanation how Bitcoin works.
Was aired yesterday in the Netherlands, mainstream TV, prime time: https://www.youtube.com/watch?v=8zKuoqZLyKg
Any time something is on prime time I get a little suspicious -_-
Well played, sirs.
Whatever...
BTC, BTChez
Agree with the analysis of potential Chinese impact.
I'm the first to acknowledge the "running correction" befuddled myself and others with its length and multiple head fakes, but there are a few TA reasons to think the bear is over. A new bull could easily last several months or even 1-3 years.
Even a CNBC "expert" should be able to determine what the last 9/10 up weeks on sequentially rising volume means vis a vis accumulation/distribution.
Lower volume pullbacks on the weekly to key levels will be potentially crucial if it rockets higher from there.
Rising volume? You need to up your meds.
Yes.
I'm all set with meds.
Put it on weekly scale
https://bitcoinwisdom.com/markets/huobi/btccny
INSANE volume
I think you've been in the casino too long. Real markets don't gyrate to the fluctuations of overfunded manipulators seeing animal shapes in clouds.
Back when gold was widely used as money, it didn't form head-and-shoulders configurations and all that crap.
Likewise, bitcoin is a real market. No one can manipulate its value upward or downward regardless of what they see on a technical chart. People just buy it when they need it and sell it when they don't and its price moves up and down accordingly. Simple as that.
Overfunded manipulators would have a vested interest in the failure of crytocurrency specie displacing their own central bank fiat. If I were them I would buy and hoard btc over time in small increments and dump it en mass at strategic times to dampen any rise. Monetary "magicians" and their govt sympathizers obviously don't want free market specie to trump slave system fiat as money. They will use price manipulation, specious economic rationalizations, propaganda smear campaigns, and force of law to suppress any specie challenge to their fiat.
Hoard over time? Impossible, any regime change will raid it or the Fed will raid it. But, why bother with subtlety when they can counterfeit it as they do other currencies?
I plan to sell mine when I hit the Break-Even Event (BEE). Soon, I hope.
Ditto for my other "Store Of Value", where the whole 'Store' sunk down to the basement, like some kind of a sinkhole. Or should I buy more of it, while it's cheap, to offset the total costs? The more I buy, the more I save, right?
Ah, the joys of being a Contrarian.
(p.s. I'm not putting in 'Sarc-Tags-for-Dummies')
Quit while you're ahead. The art of "investing" is knowing when to SELL.
Sell low buy high. Only for the timid...
Buy bank stocks, generational buy ... just kidding ;)
Electronic block chain beanie babies?
I expected that.
I.m long on Beanie Babies. That ear misprinted Jerry Garcia Bear is my retirement plan.
A whole bunch of US based speculators rushing in with the hope a whole bunch of Chinese will follow them.
A mess of Chinese speculators buying Bitcoin hoping some Americans are dumb enough to trade real money for Bitcoin.
A few Wall Street manipulators saying "Excellent" as the morons line up once again.
Nobody uses Bitcoin to move money. It takes far too long to get your money out. Bitcoin has and always will be a ponzi.
Just like any Ponzi some people can get very rich along the way. But the winner is always Wall Street pulling the strings.
Gold and bitcoin are scarce, divisible, fungible, portable, and durable. But ponzi.... not so much.
It's easy to BUY millions of dollars of bitcoin, but it will take you months (or more) to get it back out in dribs and drabs.
I always laught at people who tell me it's easy to cash out lots of bitcoin, and there are "lots" of places that will do it. I ask them to NAME a place. They come back and tell me to search the web myself.
Why cash out? bitcoin is superior to currency and every day there are more places to spend btc.
"Cash it out" at overstock.com or any brick and mortar store at coinmap.org
or buy stocks on T0.com.
or better yet never "cash out" because bitcoin appreciates against fiat currency.
Something gold is supposed to do.
Even if cashing out is laborous, evading capital controls is not.
But there are lots of people exiting fiat currency. Seems there are plenty of people willing to swap their fiat for a functional alternative.
In reference to "Something gold is supposed to do"
Gold is the ultimate insurance and store of value. There is ZERO counterparty risk.
You simply have to adopt a different time horizon, i.e. it ain't a day trade ;)
"Gold is the ultimate insurance and store of value. There is ZERO counterparty risk."
I'm glad you think so. I have a few tungst... I mean, gold bars I'd be willing to let go super-cheap if you're interested. ZERO counterparty risk, right?
For me it's not about crytocurrency vs. PM it's about specie vs. fiat.
"Lots of people exiting fiat currency"???
Hahahahhaha, no, there aren't a lot of people exiting fiat. About the same number of people are exiting fiat as there are members of Scientology. Both are tiny, fringe groups.
Did you read the article you dolt?? How else besides people heading for the exit do you explain the 60% surge??
2 dozen exployees at Huobi just to onboard new customers and comply with AML/KYC. That's more than the US has hired in any category except waiters.
Sorry, SOME people are getting out of Fiat. The rest have a gun to their head or their head in the sand.
From Wiki: U.S. economist Nouriel Roubini, a former senior adviser to the U.S. Treasury and the International Monetary Fund, has stated that bitcoin is "a Ponzi game".[164] In February 2014, an asset manager and columnist for The New York Post called bitcoin a Ponzi scheme, opining, "Welcome to 21st-century Ponzi scheme: Bitcoin".[165] The head of the Estonian central bank, Mihkel Nommela, stated, "virtual currency schemes are an innovation that deserves some caution, given the lack of ... evidence that this isn’t just a Ponzi scheme."[161]
Source: https://en.wikipedia.org/wiki/Bitcoin
Bitcoins may not be ideal for money laundering because all transactions are public.[291] Authorities, including the European Banking Authority[29] the FBI,[33] and the Financial Action Task Force of the G7[292] have expressed concerns that bitcoin may be used for money laundering. In early 2014, an operator of a U.S. bitcoin exchange was arrested for money laundering.[109]
Source: https://en.wikipedia.org/wiki/Bitcoin
Now: http://www.marketwatch.com/story/bitcoin-is-now-officially-a-commodity-and-some-find-that-odd-2015-09-18
From MW article: However, denoting bitcoin as a commodity has left some traditional commodity players perplexed. “I think it’s a little bit odd [to refer to bitcoin as a commodity],” said Fawad Razaqzada,
Our boys seem to like Bitcoin just a bit too much.
You can check George Selgin, a well-known economist and free banking advocate, which defines Bitcoin as "synthetic commodity money".
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2000118
Even though the article is nearly three years old, it explains beautifully why Bitcoin is superior to fiat money. A must-read.
haha "real money" - you mean worthless fiat backed by exponentially rising debt, threats of violence and murder on large scale.
"real money", thats endlessly created out of thin air by governments for financial criminals to manipulate markets.
no one, no wall street thugs, no banksters can create bitcoins out of thin air - its fully secured by science, math, cryptography and decentralized trust machine.
Your quote: "no one, no wall street thugs, no banksters can create bitcoins out of thin air - its fully secured by science, math, cryptography and decentralized trust machine."
The dollar used to be backed by gold too, whats your point? Have you held through a crisis yet? The stuff is not even life tested yet. It cant be counterfeited? Give it time? All money seems to become corrupt over time.
...
You're an idiot. A LOT of people all over the world use BTC to move money and it works every single time. It's quick and cheap. Try it once and then have an opinion.
You're the idiot.
Daily transactional value of bitcoin? About $80 million dollars. That's about 30 seconds of trading on the NYSE alone, or 2 hours of sales revenue at Walmart.
you do realize you can fit entire daily trading value of nyse or daily sales revenue of walmart into one bitcoin transaction....
....every day, non stop, no limits, for a few cents, fully verified, securely trusted, within minutes
good luck doing that through bankster channels
If BTC turns out to be a scam a whole lot of Chinese muppets will be slaughtered. If BTC is what some hope, they will have done well. Time will tell. I just know .gov around the world will not sit still with letting a tax base slide.
"Turns out to be a scam" have you got a technical explanation on how that would happen or are you just another idiot talking about something you know nothing about?
SGE has been net shorting gold for the last few days. They are obviously not speculating in gold.
Very surprising to me the lack of emotional outbursts typical of any article regarding bitcoin!
Personally, I might consider holding some of my assets in bitcoin were it not for the very real possibility that the access to the web we enjoy today might dissapear in the blink of an eye tomorrow.
What are the possibilities you're thinking of that might cause us to lose that access? My thinking is that if the Internet goes down to an extent that would have a negative impact on Bitcoin, no one's even going to notice because of the 99 thousand other awful things that would simultaneously start happening to our just-in-time delivery, clockwork supply chain economy and the people who depend upon it for jobs, food, fuel, etc.
A widespread power failure will do it very easily. In 2003, there was a power failure in 8 States in the NE US and Canada that cut power to 55 million people for up to several days.
Most telephone, cable, wireless communications were down after 12 to 24 hours, because only the largest stations use generators, everything else uses battery backup. That battery backup is only good for a day max.
So almost all internet was also down in that region becasue the ISPs were down and you can't get directly to one of the major hubs directely. Cell system was also down after a day, except for a few locations that had generator rather than battery backup.
You say you can just travel 500 miles to an area that still has power? Hope you have enough gas stored, because all the gas stations are closed because THEY also don't have power. You also needed CASH, becasue all the electronic banking was also down.
The couple gas stations that did have generator backup were sold out in a few hours and there was no resupply, because the refineries and storage facilities also had no power.
The lesson? The world can go to shit in one day. You only have access to what you can physically hold in your hand.
It may seem a bit hazy and I am inhibited but will anyway ask the question, naive as it may seem: who actually controls the internet? My guess it is as it seems, who else, but the Government entities, guranteeing us Net Neutrality and so on. At one time, I had this gut instinct, to be less hazy here, that Google and the other companies who own these servers, would SELL OUT and we will be fucked out of our Bitcoin, should I care to own any.
Hundreds of private companies own bits and pieces (segments) of the infrastructure, points and the lines between points. Governments have some of their own infrastructure too in places.
All of these independently owned segments are interconnected and data is sent from point to point for a fee. Data travels from point to point following various rules. Some data will, say, be routed the fastest route, and other data the cheapest route.
Sometimes the cheapest route can be around the world instead of a direct route. Say from Japan to Hong Kong, but via the US.
There is a LOT of redundancy, as there are usually dozens to hundreds of different routes connecting major nodes. So data can take literately an infinite number of different paths to go from one place to another.
Government controls are usually only the gateways into and out of a country. Satellite can bypass these gateways, but the bandwidth moved by satellite is minuscule compared to fibre trunks.
So, who controls the internet? Nobody really, except for countries which can act as gatekeepers if they want.
The Internet itself is another network of voluntarily cooperating entities. Governments don't control it to a significant extent. Net neutrality is a totally unnecessary, even undesirable meddling in the business of Internet Service Providers, despite what it may look like at first glance. There are authorities such as the Internet Corporation for Assigned Names and Numbers (ICANN) which nominally controls IP address allocations and domain names only because people agree to follow whatever they say, but that can change very quickly and the Internet can function just fine without such authorities (there are alternatives). Big corporations themselves don't have any control over the Internet itself either.
.
And then as the use of Bitcoin becomes more common using it to transfer value the penny begins to drop and they realise it is the value and why not do business directly in bitcoin and thats when you really see the price go up, give it 4-5 years though.
This will end in tears. If you have any sell, if you don't, do not even think of buying at these levels. I doubt bitcoin will be above $250 by the year's end.
Its funny you would think the Chinese would go for gold instead of bitcoin? Come on China? they are fairly "old school" and sales have soared in gold over the past month. The price of gold/silver has gone no where? Maybe if we had a free legit gold/silver market that people could trust? and that is transparent? Its unreal what people understand as money? I dont think block chains cut it quite yet. I am open to it though. Not buying at these levels, Block chains have some proving to do for me. The only crisis btc went through they tanked? Compared to gold, no comparison.
How is any digital "money" really safe, I know plenty of bank accounts that have been hacked? How is bitcoin immune from hacking? I think it cant be immune? Given time there is a good chance it will get hacked too. I hate our government for manipulating gold, they are cheaters, lier's and losers who dont know how to do things the "right" way. Hopefully someone will short it, then hack it. Nice challenge.
You wouldn’t even need to hack the coin, if you could that would be the ultimate, but just the system would have to be breeched in order for confidence to be lost, people have much more faith than I do. I suppose this applies to most things digital. Its probably already been hacked, we just dont know it. Uncle sham could do it, easy peasy. The coin has to be able to stand on its own and I dont think it can, maybe yet. Your only as strong as your weakest link. For anyone to say "secure digital money" is kind of funny, especially when its one group that faces the world, if it was the world facing one group it would be different.