Financial Watch | Bitcoin continues to skyrocket and speculative risk rises

Xinhua News Agency, Washington, June 26 (Reporter Yang Chenglin) Bitcoin prices continued to maintain their gains after breaking through the $10,000 mark last week, but the market speculation has increased recently and the bearish power has risen. Analysts believe that bitcoin and other cryptocurrencies will take time to win market trust. Investors should be alert to the speculative risks in the bitcoin market.

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On March 8, 2014, in Seoul, South Korea, a staff member showed how to use a Bitcoin ATM. (Photo by Xinhua News Agency reporter Yao Qilin)

Since the beginning of this year, due to multiple factors such as the escalation of economic and trade disputes and the expected downward adjustment of the global economic growth rate, global capital market volatility has intensified. Bitcoin has shown the characteristics of safe-haven assets and attracted many investors' attention. In addition, Facebook's proposed release of the cryptocurrency Libra has greatly increased the market's popularity and attracted more investors into the cryptocurrency market.

According to data from the US Bitcoin Base, the price of bitcoin continued to rise sharply on the 25th. At 20 o'clock in the US East, the single price was $11,816, and the day's gain was over 6%. Since last week's breakthrough of the $10,000 mark, Bitcoin has continued its upward trend. This is also the price of bitcoin that has exceeded $10,000 since the end of 2017.

Bitcoin’s recent price surge has attracted a lot of speculative funds to enter the market. The latest issue of the futures position report released by the US Commodity Futures Trading Commission shows that as of the 18th, the non-commercial positions in the bitcoin futures traded on the Chicago Mercantile Exchange, the non-commercial positions aimed at obtaining speculative profits have increased significantly, and the hedging of spot transactions. The commercial position has not changed, which means that the speculative nature of the Bitcoin futures market has increased.

At the same time, long and short positions in non-commercial positions increased compared with last week, but net short positions increased compared with the previous week, indicating that speculators' willingness to bearish bitcoin is heating up. At the same time, from the total position data, short positions also exceeded long positions.

Analysts warn that while bitcoin prices are rising rapidly, investors should be wary of speculative risks in the bitcoin market. This is because the bitcoin market is small and easy to price; on the other hand, the global bitcoin market regulation mechanism has not yet been established.

As of the 25th, the global market value of the global bitcoin market was only $209.5 billion, less than one-fifth of Microsoft's market capitalization. Lars Seyy Kristensen, chairman of Concordium, an American blockchain network company, said that in a market where Bitcoin is highly volatile and has a small trading volume, it can push prices up or down without much effort. 1,000.

In recent years, bitcoin prices have fluctuated drastically: in early 2017, bitcoin prices were less than $1,000. By the end of the year, prices had exceeded $10,000 for the first time and quickly approached $20,000. In 2018, bitcoin prices fell to less than $4,000. It was not until this year that the uptrend was regained.

In addition, bitcoin and other cryptocurrency markets have been plagued by hacking, security breaches, market fraud, and inadequate regulation. For example, Ernst & Young has recently released a report saying that a Canadian cryptocurrency exchange has misappropriated client funds. The well-known cryptocurrency exchange "Cuan An" also exposed more than 7,000 bitcoins stolen by hackers in May this year.

With the recent announcement by Facebook that the cryptocurrency Libra will be launched, cryptocurrencies have caught the attention of some central banks and financial regulators. Bank of England Governor Mark Carney said that he is open to cryptocurrencies, but cryptocurrencies need to meet the "highest standards of regulation."

Federal Reserve Chairman Jerome Powell also said at a press conference held last week that the application of cryptocurrency has both potential and potential risks, and should treat cryptocurrencies in a safe and sound regulatory position.

Although the new round of bitcoin has once again become the focus of the market, investors' views are still in a divergent position: some of the sought-afters have high hopes for “digital gold”, but traditional investors represented by Warren Buffett regard it as "Gambling machine".

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On May 4th, in Omaha, Nebraska, USA, Berkshire Hathaway Chairman Warren Buffett answered questions from reporters before the opening of the 2019 Annual General Meeting. (Photo by Xinhua News Agency reporter Yang Chenglin)

John Shedunov, assistant professor of finance at Villanova University in the United States, believes that there is reason to give Bitcoin more trust than the last time he broke the $10,000 mark. "But I still don't believe this price is OK. continuous".

Michael Graham, an analyst at Jiatong Investment Co., said in an interview with the US media that Bitcoin has a good chance to be widely used in the future, but it is still a growing "grassroots experiment".

Source: Xinhua News Agency New Media