Bitcoin price has been in the spotlight of the financial media lately with its soaring value and is understandably getting plenty of attention. In a televised interview on Bloomberg, an executive at BitPay – the largest payment processor in the industry, outlines his reasons for the price swell.
Sonny Singh, chief commercial officer at BitPay appeared in a televised interview on Bloomberg where he was asked about bitcoin’s recent rally. The rapid price surge began over the past few weeks to break the $750 ceiling late last week, hitting a 28-month high for the cryptocurrency.
Inevitably, the primary factor he cites is the demand from new Chinese investors who are looking at the cryptocurrency as a store of value.
The first opening session of 2016 when Chinese stock markets opened on a Monday saw shares dip to their worst ever start to a year, plunging 7%. China’s new “circuit breaker” measures were enforced to prevent further losses and volatility in the stock market.
Some of the factors for a slowdown of the Chinese economy is diminishing activity in an otherwise factory-intensive manufacturing Chinese industry that has a telling effect on the wider economy. While manufacturing numbers are down, increasing food prices are among the primary factors for inflation.
To improve the stagnating economy, China’s central bank has notably lowered its lending and deposit rates’ benchmarks and has notably lowered the minimum ceiling of mandatory cash reserves mandated for banks.
These factors and more have led to Chinese Yuan depreciating in value with the offshore Yuan following along the same path. As a result, Chinese investors are flocking to the cryptocurrency.
“China has a very big and active bitcoin trading population,” Singh stated pointing to the reason behind significant price swings of the cryptocurrency.
The very-real plausibility of the UK splitting away from the European Union is also seen as a factor behind bitcoin’s soaring rally.
Singh highlighted a surge in bitcoin price during a similar situation in Greece last year, when economic and geopolitical uncertainty led to bitcoin rallying at the time. The price of the cryptocurrency declined later in the year, once again influenced by Greece when a pro-EU party won the majority vote during the national elections.
“People are looking at bitcoin as a safe haven, internationally,” Singh stated, alluding to the uncertainty of Britain’s membership in the European Union leading to a positive outlook toward the cryptocurrency.
The impending halving event in July is seen by observers as a significant factor behind the increased buying of bitcoin.
Singh referenced a recent conversation with a Chinese bitcoin exchange where the latter revealed “momentum trading” taking over due to investors looking to buy in before the supply of the largest cryptocurrency of them all is cut down by half.
It’s a mindset. A lot of people think this currency [bitcoin] is going to be worth a lot of money. When the price starts running up, people then have the fear of missing out.
An executive of the largest bitcoin payment processor in the world, Singh readily attests to an increasing number of bitcoin transactions around the world, underlining the growing popularity of the cryptocurrency as a payment method.
Two years ago, 70% of our [bitcoin] transactions were happening in the United States. Now, it’s 30% domestic whereas 70% of our transactions occur internationally.
One of the bigger bitcoin adoption stories this year was that of gaming platform and distributor Steam, enabling bitcoin as a mode of payment. Singh revealed that Steam was looking at markets such as China, Brazil and India – countries with low credit card penetration – as regions that are benefiting from bitcoin as a currency.
Less than a month ago, bitcoin price had scaled $475, then setting a new year-high on May 27, 2016. A week ago, bitcoin price had soared to a 2-year high beyond $650.
At the time of publishing, the Bitstamp Price Index (BPI) saw price trading at $753.65.
Last modified: June 10, 2020 9:21 PM UTC