What goes up must come down.
A week ago, bitcoin had surpassed the $700 mark, and the headlines were giddy with excitement about how high bitcoin could go, marking bitcoin’s biggest break since Nov. 2013.
One week later and bitcoin’s price dropped as low as $561.40 — a price that it hasn’t seen since the end of May.
Bitcoin’s dip yesterday was timed with the looming Brexit vote, which many thought would have some impact on bitcoin’s price. We’ll quickly find out with the decision officially in from the U.K. votes to leave the EU. All in, bitcoin has dropped 25 percent over the last six days, and there is much speculation as to what might be impacting its price.
But following the vote, unlike Brexit’s impact on Wall Street or its sting to the pound, bitcoin’s price saw a boost. On Friday morning (June 24), bitcoin’s price was over $669. It fluctuated in the $660s Friday morning.
So what are the theories on what has been impact bitcoin’s price this week?
Theory 1) Bitcoin Exchange Tech Hiccups: A major Hong Kong-based bitcoin exchange shut down for a few hours, because of what the company, Bitfinex, called “networking issues.” While the issues were fixed, this reportedly caused a halt to a lot of bitcoin trading. Since nearly 90 percent of the bitcoin volume is centered in China, this hiccup could have had a material impact on the market.
According to what Bobby Lee, CEO of Chinese bitcoin exchange BTCC, told CNBC: “The bitcoin price — when it goes up — is always fueled by a high leverage, people using margin to borrow money to buy up the price in anticipation of the block-rewarded halving, so the smallest hairline crack can cause a selloff.”
When a site like that goes down, he said it creates a chilling effect on the entire bitcoin exchange ecosystem, causing more people to want to sell fast. Who can blame them. After all, there are Mt. Gox and the DAO hack of just last week that can just plain spook people.
Theory 2) China (Again): The fluctuation of the Chinese yuan, given the high amount of bitcoin trading (linked to Theory 1). Even the threats of the Brexit hurt the Chinese yuan. This could also impact bitcoin’s price.
“Brexit could be a major factor, but since the lion’s share of bitcoin trading activity occurs in and around China, it’s unlikely that this is the primary cause. Although if you look at the bitcoin price among exchanges based in China, they are $10–$20 lower than the global exchanges. This might reflect the yuan’s five-year low and the expected yuan volatility as a result of Brexit,” Aurélien Menant, CEO and cofounder of Gatecoin, a digital currency exchange, told CNBC.
Theory 3) Brexit: Some believe that all of the uncertainty related to the Brexit played a big role in bitcoin’s price fluctuation. And that seemed to prove to be true by Friday morning.
Now, with the U.K. voters officially deciding to leave the EU, there’s already chatter about how it has and will continue impact bitcoin’s price.
At the same time, bitcoin had already received some safe-haven bids in recent weeks, thanks to uncertainty about which way Britons would vote in the country’s referendum on its membership with the European Union (EU), which began on Thursday (June 23) morning.
But outside the discussions surrounding bitcoin’s price fluctuations (which have dominated the digital currency discussions this month), there was plenty of another news across the bitcoin ecosystem.
Coinbase And PayPal Pair Up
Is PayPal warming up to bitcoin?
This week, it was announced that Coinbase, the virtual currency wallet and exchange, has partnered with PayPal so that bitcoin can be added as a new tender type in PayPal accounts.
Coinbase users can sell/cash out their bitcoin into their PayPal accounts. For now, the services are in beta but will expand soon, Coinbase said.
“Thousands of Coinbase users use PayPal for their fiat currency transactions around the world. Through this integration, Coinbase users are now able to sell BTC and have their USD funds deposited to a PayPal wallet. To start, we’re offering PayPal cash-out for U.S. users only. In the future, we hope to add support for other countries and to support buys through PayPal as well,” Coinbase wrote in a blog post.
Circle’s $60M Chinese Investment
China appears to have a big impact on the bitcoin market, and this week, a consortium of technology and financial firms in China invested $60 million in the Chinese unit of Circle, a blockchain payments startup.
Investors include Baidu, China’s search giant; CICC ALPHA, a growth investing unit of China International Capital Corp.; the private equity arm of China EverBright Investment Management Ltd.; CreditEase; and IDG Capital Partners.
The Latest Blockchain Test
A group of U.K. banks may have just hit a cross-border blockchain payment milestone.
This group, which includes Santander, CIBC and UniCredit, announced this week that it has hit a new milestone in the blockchain innovation space, claiming that it has moved real money with blockchain’s technology using Ripple, a digital settlement firm.
What Ripple enabled banks to do is convert funds of one local currency to another and act as an instant exchange for the transaction. Before this test was executed, the process took three to five days, and there was more of a chance of error.
‘Bitcoin Creator’ Hoarding Patents
Remember Craig Wright?
To refresh those memories, he’s the Australian computer scientist who is claiming to be bitcoin’s inventor (AKA Satoshi Nakamoto). He recently went as far as to say that he’d prove it, before he changed his mind.
A month or so later and Wright is back in the spotlight, whether he wants to be or not.
According to documents reviewed by Reuters and interviews between the media outlet and those claiming to be Wright’s associates, the Australian is now on a crusade to file patent applications related to bitcoin and blockchain. According to the data gathered, in the past five months, Wright has filed more than 50 patent applications in Britain through Antigua-registered EITC Holdings Ltd. This company is reportedly connected with Wright himself.
The patents that Wright is specifically focused on cover a variety of topics in the industry, but a Reuters report mentioned that a few of them relate to a way to pay for online content more securely and a system for using blockchain for running an Internet of Things operating system.
Looks like Wright is back in the bitcoin game. Whether or not he’s Satoshi? We say — prove it.