Bitcoin skyrocketing: or related to the Turkish currency crash

Another test.

At 12:30 pm Beijing time on April 2, Bitcoin (BTC) began to force, from the highest of 4,184 dollars to 4,826 dollars of 13:30, an hour or so, an increase of 15.34%, and since November last year The new high. The number of open positions closed in 1 hour was 659,000, which was about 14,200 BTC. I don't know if it was intentional or not. In this critical hour, many cryptocurrency exchanges failed.

Many people think it is a technical rebound, as Forbes cryptocurrency analyst Joseph Young said on Twitter, "It seems that today's bitcoin's sharp rise is only technical, and once it breaks through $4,200, it starts to soar."

But starting from the basic principles of Bitcoin, this rise is not just as simple as a technical rebound. Observing the international situation, on March 27th, the Turkish stock market plunged 7%, and the overnight exchange rate soared to 1200%. Turkey suffered a double share of the stock exchange. The history is surprisingly coincidental. Whenever there is a problem with a national currency, it will lead to an increase in the demand for bitcoin, which will become the fuse of bitcoin's rise, and the market's liquidity will become a booster for Bitcoin's rise.

Zhao Wei, Ph.D. in Economics at Beijing Normal University, conducted a study that selected Bitcoin from March 24, 2015 to March 23, 2017, comparing data and transaction data of 23 exchanges around the world. 19 kinds of legal currency, the final conclusion is: the purpose of trading Bitcoin is to cross-border. In addition to speculating, the people involved in cryptocurrency trading are trying to transfer assets.

The study is based on the US dollar. In addition to the Indian rupee, Mexican peso and Australian dollar, the other 16 legal currencies are in compliance with the one-price law on 23 platforms. Explaining the one-price law in digital currency is the platform renminbi quote of Bitcoin, which is converted into US dollars according to the RMB exchange rate, which is consistent with the platform dollar quoted price of Bitcoin. This is equivalent to buying a burger in China. After you convert the renminbi price for burgers into dollars, the price is the same as the price you buy hamburgers in the US. Explain that in these 23 platforms, the quoted price of Bitcoin fully reflects the fluctuation of the foreign exchange market. Further explaining that the main purpose of people trading Bitcoin is to cross-border and convert bitcoin from local currency to US dollars.

At the beginning of 2018, Venezuela's currency glass vars crashed, stimulating the rebound of Bitcoin in February. According to an interview conducted by the media in Venezuela afterwards, the Venezuelan people exchanged a large amount of bitcoin.

According to Bloomberg News, on April 17, 2018, Bitcoin set a record in the local market, reaching $1 million a day. Venezuela's activity on LocalBitcoins is second only to Russia, ranking second.

Figure 1: Dollar to Glass Vale exchange rate chart (monthly line)

In July last year, the Turkish lira collapsed due to problems with the Turkish government’s finances, when Turkey’s bitcoin offer suddenly rose. Because some people already know or expect the lira to be in trouble, they need to change the lira into dollars. At this time, the demand for bitcoin will rise, so the price of bitcoin also rises sharply.

Figure 2: US Dollar to Lira exchange rate chart for July last year (monthly line)

In Beijing time on April 2, bitcoin rose, it is also possible that the fuse will be the Lira diving again in March.

In fact, the birth of Bitcoin is the depreciation of the national legal currency exchange rate. Nakamoto's bitcoin paper appeared in the 2008 financial crisis, and the Bitcoin founding block recorded the title of the front page of the Times in the day – The Times 03/Jan/2009 Chancellor on brink of second bailout for banks (On January 3, 2009, the Chancellor of the Exchequer was on the verge of implementing the second round of bank emergency assistance.)

In addition to the fundamentals, the sudden surge in bitcoin on April 2 also has a reason for relatively abundant liquidity.

In 2019, the currency circle showed signs of recovery. The rise in the price of coins from wave-field coins to platform coins to IEO projects has brought about a wealth effect, attracting investors to bring funds into the market. This also provided liquidity ammunition for the sudden surge of BTC. When Bitcoin broke the psychological barrier of $4,200, the surge suddenly came.

But how long can Bitcoin rise? From the historical experience, the demand for instability in the Turkish currency is limited; from the perspective of liquidity, Bitcoin has a large number of sets of plates, and it is unlikely that it will continue to fly.

This article is [inter-chain pulse] original, the original link: https://www.blockob.com/posts/info/11544 , please indicate the source!

Author: Mutual chain pulse commentator Yuan yet