Bitcoin Up on Uncertainty & Demand for Alternative Assets
Bitcoin headed for its biggest weekly jump since June as rising geopolitical risks boosted demand for alternative assets.
The cryptocurrency surged 15% on the week to $900.40 in Hong Kong driving its gainer this year to 107%, data show. The last time it was at such high marks was in January 2014, when Bitcoin was tumbling from its record price of $1,137 following tightening Chinese controls.
Bitcoin is extending a rally that has beaten every major currency, stock index and commodity contract in Y 2016.
Buyers sought alternative assets this week on the killing of Russia’s envoy to Turkey and a separate attack that left 12 people dead in Berlin.
Weakening pressure on the RMB Yuan, which intensified this month as the US projected a faster pace of tightening next year following Donald Trump’s Presidential election win, is also increasing demand for Bitcoin in China, where the majority of trading occurs.
Terrorist attacks in Europe boosted haven demand in capital markets, and gold has been falling since Trump was elected. Global instability has to a large extent directed funds to the bitcoin market.
Bitcoin, which trades in cyberspace and is mined by code-cracking computers, is gaining popularity among some investors as an alternative safe haven because it is deemed to be less influenced by government regulations and changes to monetary policy.
Gold, which tends to trade in tandem with Bitcoin when haven demand is strong, has fallen in Q-4 as US rates rise, narrowing its premium over Bitcoin to the least in 3 years.
“The Fed’s rate hike announcement has probably spooked a lot of emerging-market investors, particularly those in China, who are now flocking to bitcoin as a refuge from weak fiat currency assets,” said the Head of Marketing at Gatecoin Ltd. in Hong Kong. “As we’ve passed the $800 Bitcoin price, a strong resistance point in the past, and move closer towards the psychological $1000 stratosphere, anything seems possible.”
Merry Christmas, Happy Hanukkah and Good Wished for Success in Y 2017