Iran's Bitcoin price soars? The real situation may be just the opposite

Source: Longhash

A drone attack in the United States killed the Major General of the Iranian Revolutionary Guards, causing global attention to instantly focus on the region. Qassim Soleimani, killed by the United States, is the commander of the Iranian Islamic Revolutionary Guard ’s elite unit "Quds Force" and is responsible for military operations in the Middle East. And this crisis not only caused the global oil price to start to soar, but the price of Bitcoin also started to rebound from 6850 USD.

According to many media reports, on the LocalBitcoins website, a seller located in Iran (sold Iranian rials) quoted that the price of a single bitcoin exceeded $ 24,000. This price even surpassed the world's highest price of bitcoin (about $ 20,000) in December 2017. As a result, many media around the world have reported that the price of bitcoin in Iran has skyrocketed due to the Iranian incident, and people are rushing to buy bitcoin. Many people even suggest that they can go to Iran to move bricks. There are also some comments that because of its own characteristics, Bitcoin is considered by many as a safe-haven asset and has gained huge recognition in Iran.

LocalBitcoins is a Finnish peer-to-peer bitcoin trading platform based in Helsinki. The website provides a service that can easily find buyers and sellers who want to trade bitcoin, so that they can conduct person-to-person bitcoin transactions with others. Users post advertisements on the website, explaining the exchange rate and payment method for bitcoin exchange. This service promotes the off-exchange transactions between bitcoin and local currencies.

However, it seems to be relatively hasty to draw such a conclusion from the data of pending orders alone. After all, the situation in each country is very complicated, and it is difficult to see the whole picture of the situation with just one data. So is this the case? Is Bitcoin in Iran receiving huge attention because of this incident? Let's see if the data supports such a conclusion.

Iranian rial (IRR) is the currency name for Iran. From the end of 2011 to the beginning of 2012, the United States and Europe announced sanctions on Iran, which caused the rial to depreciate significantly. Since 2012, the rial has depreciated by about 60%. As of October 10, 2012, the rial depreciated by more than 40% a week. As sanctions continue, the rial continues to depreciate. By April 2018, the close to the date of U.S. President Trump's announcement of a comprehensive withdrawal from Iran ’s comprehensive nuclear issue in May (JCPOA), led to a further rapid depreciation of the rial, especially the restrictions on Iranian oil exports , Directly led to the exchange rate crisis of the rial.

To cope with the pressure caused by currency devaluation and the rapid rise in the cost of imported goods, Iranian policy makers have adopted a number of parallel exchange rate policies. And strictly control the official exchange rate of one dollar to 42,000 rials. According to the official exchange rate, then the previous pending order price on LocalBitcoins, that is, 1 billion rials for 1 bitcoin, then the official exchange rate of 1 billion rials is almost 24,000 US dollars. In other words, according to the official exchange rate, the price of Bitcoin has indeed broken the highest point in history.

However, considering that Iran's "official exchange rate" does not represent the current actual situation, the Iranian government also has an exchange rate, the NIMA exchange rate, which is named after the online currency system established by the Iranian Central Bank (CBI) in April 2018. The system can be used to purchase foreign exchange on exchanges and banks, and exporters are obliged to repatriate their export earnings. According to media reports, in recent months, the NIMA exchange rate has been around 110,000 IRR / USD ( https://www.bourseandbazaar.com/articles/2019/8/21/iran-delays-currency-reform-demanded-by-private -sector ).

In addition, Iranian rials also have different exchange rates in the so-called "free market", which is 125,000 IRR / USD. The exchange rate may be considered closer to the actual exchange rate recognized by the market, and the use of a lower exchange rate makes it easier for ordinary Iranians to bear their cost of living. ( Https://www.intellinews.com/rouhani-says-iran-s-resistance-budget-has-least-possible-dependence-on-oil-173035/ ) In addition, according to different reports on the Internet, there are also media It is believed that the actual exchange rate is actually between 130,000 IRR / USD and 146000 IRR / USD.

And we calculate based on the real exchange rate of 125,000 rials that can be exchanged for one US dollar, then the 1 billion rials is about 8,000 US dollars, which means that the actual quote on LocalBitcoins is about 8000 US dollars for one bitcoin, then the price seems It is not much higher than the global average price. And if we consider that this crisis may lead to further depreciation of the rial, or we directly use the exchange rate of riyal 146,000 to calculate, in fact, the actual Bitcoin price in Iran may be lower than the current global average price.

In addition, let's take a look at the trading volume of LocalBitcoins in Iran. From the above chart, when the rial entered a rapid depreciation channel in the second half of 2017, Bitcoin's OTC transactions in Iran did begin to heat up rapidly. Indeed, many people began to try to convert their rials into Bitcoin, but it is also possible to convert bitcoin into US dollars.

According to its related reports, LocalBitcons may no longer serve the Iranian region after May 2019 due to U.S. sanctions or other unknown reasons, etc., but it does not seem to stop Iran's enthusiasm for trading Bitcoin on the OTC. At the time, as long as traders located in Iran were banned from using Localbitcoins in the country, a short message was displayed on the Iranian part of the site, stating that the exchange was "currently unavailable." However, on the chart, the trading volume has instead formed a relatively high point. However, starting in November 2019, as Iran cuts off the country's Internet, transaction volumes have plummeted.

On November 15, 2019, the Iranian government's decision to triple the price of fuel fueled a national riot. On November 16, the Iranian government stated that saboteurs, rioters, and gangsters behind the scenes used various Internet services to organize their activities and carry out sabotage activities across Iran. Therefore, the country's highest security department decided to cut off the Internet. .

On November 18th, Iran ’s Minister of Information and Communications Technology Mohammad Javad Azari Jahromi said that by cutting off the Internet, many Iranian Internet service providers were able to make the country ’s National Information Network (NIN) widely available for the first time. Known as the "domestic Internet". The successful switch of many online services to Iran's national information network has not completely stopped the country's Internet banking and other regular activities.

Regardless of the impact of other Internet activities, from the data of LocalBitcoins, this cutoff obviously caused a practical disruption to the Bitcoin OTC transactions in Iran, and may even have an impact on the transmission of Bitcoin.

Let's take a look at the search data brought to us by Google Trends. In the past 5 years, the correlation between the search popularity of the keyword "Bitcoin" and the transaction volume of LocalBitcoins in Iran is obviously consistent. But if we look at the data within 7 days, it seems that there is no special change, that is, the recent crisis event does not seem to make Iranian people have additional interest in Bitcoin.

In summary, we can find that as described by many previous media, the phenomenon of soaring Bitcoin prices in Iran due to the crisis event does not seem to be in line with the actual situation. According to Iran's actual exchange rate, the price of Bitcoin does not seem to be much different from the average price of Bitcoin worldwide, and may even be lower than the average price. According to the current trading volume of LocalBitcoins in Iran, it is almost the lowest point in history. It is almost close to no transactions, so a small number of transactions are not representative. Even from the data of Google Trends, Bitcoin does not seem to have triggered extra public enthusiasm. Therefore, we do not have any reason to believe that Bitcoin has been sought after in Iran due to this incident, and has caused people's enthusiasm for buying.

However, the global bitcoin price has indeed rebounded, and it is very consistent with the time of the Iranian crisis. We cannot rule out its correlation, how the future development will happen, and whether there will be more Bitcoin and global crisis events. The relevance also needs time to prove.

This article is derived from " Longhash ".