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Businesses Bitcoin The Almighty Buck

Bitcoin Price Jumps 21% Over 4 Days, Reaching a 21-Month High (techcrunch.com) 106

Posted by msmash from the surprise-surprise dept.
An anonymous reader shares a TechCrunch report: Bitcoin is back! Or at least, there are positive signs indicating that bitcoin might not be as dead as everybody thought. Bitcoins are now trading at $547.40 on Bitfinex (the largest USD/bitcoin exchange according to Bitcoinity). And it represents a big 21.4 percent price jump over just four days. Today's price represents a 21-month high. Surprisingly, bitcoin prices had been relatively stable for the last two months before this weekend's jump. What's the reason behind this jump? It's hard to say. Huobi and OKCoin, the two dominant Chinese exchanges, have seen many new sign-ups, as well as many buy orders. Increasingly, bitcoin's price variations are correlated with macroeconomic trends in China. These trends tell us that China still fears a deflation.
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Bitcoin Price Jumps 21% Over 4 Days, Reaching a 21-Month High More

Bitcoin Price Jumps 21% Over 4 Days, Reaching a 21-Month High

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  • If you read The Wall Street Journal... (Score:5, Interesting)

    by __aaclcg7560 ( 824291 ) on Monday May 30, 2016 @03:30PM (#52212621)
    The Feds are planning to raise interest rates at their next meeting in June.

    • Two quick questions (Score:4, Interesting)

      by Okian Warrior ( 537106 ) on Monday May 30, 2016 @03:59PM (#52212799) Homepage Journal

      The Feds are planning to raise interest rates at their next meeting in June.

      From a previous post, you seem to be in touch with economics and financial matters. Here's a question for you, and I'm not trying to be snarky.

      The fed lent out money at 0% interest for the last 7 years [wikipedia.org] or so, in an attempt to kickstart the economy.

      The loans went out to big banks [huffingtonpost.com], and I remember at the time that a lot of the loans were going to foreign banks, especially in Germany.

      Question 1:

      Many of those banks turned the money around and lent it back to the US at higher interest. This just about doubled the national debt over that period.

      If we were giving out 0% loans, why couldn't we have repurchased our own debt with 0% loans? The amount of money would have been the same, but instead of profits going to the banks, we could have reduced our debt burden and increased net revenue for government spending.

      Question 2:

      We're told that social security will go bankrupt in a few years, in our own lifetime, due to a temporary glut of baby boomers retiring. We have to adjust by accepting smaller payouts and working longer.

      Why can't we just give the SSA a 0% interest loan to cover the shortfall for a few years? Social Security has almost always taken in more than it spends yearly, and if it can work through the glut it would become solvent a few years later.

      I'm trying to understand economics, but I don't have the benefit of the standard curriculum.

      Can you tell me why these things aren't just that simple?

      • Re:Two quick questions (Score:5, Interesting)

        by __aaclcg7560 ( 824291 ) on Monday May 30, 2016 @04:15PM (#52212897)

        The amount of money would have been the same, but instead of profits going to the banks, we could have reduced our debt burden and increased net revenue for government spending.

        The reason why the federal government has budget deficits is because Congress authorizes more spending that exceeds the amount of tax revenue coming in. The Treasury issues bonds to cover the difference. This problem could be fixed by raising taxes and cutting spending. Of course, that's not a popular position with voters. They want it both ways — less taxes, more spending, and let tomorrow's generation pick up the tab.

        We're told that social security will go bankrupt in a few years, in our own lifetime, due to a temporary glut of baby boomers retiring. We have to adjust by accepting smaller payouts and working longer.

        It's a lot worse than that. In 2030, all the Baby Boomer will be retired, retirees will outnumber workers, and two-thirds of the federal budget will go to Medicare/Social Security. Taxes will have to go way, way up to pay for everything else. It's better to be poor or rich, but not middle class as they will have to pay for everything.

        I'm trying to understand economics, but I don't have the benefit of the standard curriculum.

        Get a subscription to The Wall Street Journal.

        • The reason why the federal government has budget deficits is [...]

          That wasn't the question.

          • The reason why the federal government has budget deficits is [...]

            That wasn't the question.

            No, that was the answer. ;)

          • Re: That wasn't the question (Score:1)

            by Anonymous Coward

            He doesn't want to answer the question because it would require thinking outside the his little bubble. Its absurd that we as society allow the big banks to continue to exits. They borrow at next to nothing and loan the money right back to "us" at a much higher interest rate, make the spread and if they ever get into trouble with too many bad loans, well, uncle Sam to the rescue. They are a wealth transfer mechanism from the working class to the ultra rich...

            • He doesn't want to answer the question because it would require thinking outside the his little bubble.

              Nope. The question was nonsensical as far as it concerns the national debt.

              They borrow at next to nothing and loan the money right back to "us" at a much higher interest rate, make the spread and if they ever get into trouble with too many bad loans, well, uncle Sam to the rescue.

              That's the fractional reserve banking system. Deposit a dollar into your savings account, the bank can lend out $10 by making a book entry. Where banks get into trouble is lending out too much money ($30 per every $1) and don't have enough money in the safe to cover a bank run. Hence, Uncle Sam has to periodically step in to keep the system liquid. Otherwise, we would have a depression every 25 years or so as we did during the 19th c

              • So, instead of having depression (correction) every 25 years, we have a banking system bailout by the Federal Government every ... 25 ... years.

                The only difference is, those responsible don't lose money now. And you seem to think this is better.

                I have seen three such "corrections" in my 52 years on this planet. This last one, has lasted nearly 14 years (started after 9/11) by my reckoning. The economy is stagnate, and unresponsive.

                • I have seen three such "corrections" in my 52 years on this planet.

                  Statistically, an average person will experience two recessions and a depression in their lifetime.

      • Your first question reminds me of this: https://www.youtube.com/watch?... [youtube.com]

      • Question 1:

        Many of those banks turned the money around and lent it back to the US at higher interest. This just about doubled the national debt over that period.

        If we were giving out 0% loans, why couldn't we have repurchased our own debt with 0% loans? The amount of money would have been the same, but instead of profits going to the banks, we could have reduced our debt burden and increased net revenue for government spending.

        We didn't issue credit (loans) at 0%, we sold our debt. Congress authorized

        • The capital is being sucked up by financial institutions, and accumulating there. It is also being held captive overseas. The problem isn't the supply, it is velocity. And until people realize that when the government is confiscating wealth (via taxes), the situation isn't going to change.

          I have a solution that would greatly increase velocity, but conservatives wouldn't like it, and liberal/socialist would hate it, because it would require actual responsibility and not kicking the can down the road to the n

      • The Fed is not the Federal Government. It is a private banking system. This is a common misunderstanding.

        The Debt (Federal) is a function of spending and taxes. Increasing the debt is a function of the House of Representatives and the President, with the Senate in a consent role. These debts are covered by bonds issued to private people.

        What is really happening (IMHO) is that The Fed loans money out at 0% (or near that) and those people buy up the Federal Debt Bonds at whatever the going rate is. It doesn't

  • The rationale behind Bitcoin is to ensure that everyone/everything, regardless of jurisdiction or position, have access to a common economy. What matters is its penetration to everyday lives.

    Market price is irrelevant. It could go sky high and still fail in its mission.

    • Re: (Score:2)

      by osu-neko ( 2604 )

      It could go sky high and still fail in its mission.

      Indeed, it couldn't go sky high and not fail in its mission. With those kinds of rapid value changes and deflationary tendency, it would, under those circumstances, prove itself to be a valuable commodity, but it would be a very poor choice for a currency. Alas, goldbugs usually don't understand the difference...

      • As a deflationary currency, we wouldn't need social Security or other "retirement" programs. The people who work earn currency, and save it, deflation rate becomes a savings incentive, and wealth building. The down side, is that accumulated wealth of deflationary currency tends to not work (velocity of currency) where debt based currency does.

        My view, is that it is much easier to control debt riddled people than those that own their own wealth.

  • Spike is caused by Ransomware Extortion (Score:1)

    by Anonymous Coward

    We've seen a uptick in ransomware infections over the same time frame. Coincidence? I don't think so....

    • Re: Spike is caused by Ransomware Extortion (Score:2, Interesting)

      by Anonymous Coward

      I think this is a big factor - watching realtime transactions at bitcoin exchanges, there are lots for ~1.5 BTC which is how much cryptolocker is charging

      • I'm in IT, and people often ask me about CryptoViruses, I basically tell them, use GoogleDrive, OneDrive, Box, DropBox or any number of other "cloud" based systems, and back their important shit up. Also, get a External Drive and back up (and take offline) their shit to that too. I tell them, if your computer Hard Drive died tomorrow, what would you lose? The same is true for CryptoVirusus, only that is more likely these days.

        The fact is, too many people don't want the inconvenience of backing their shit up

  • Chinese Devaluation (Score:5, Informative)

    by Koby77 ( 992785 ) on Monday May 30, 2016 @03:41PM (#52212689)
    It's not hard to say, over there weekend there was a currency devaluation in China.

    http://www.bloomberg.com/news/... [bloomberg.com]

    If you knew that the cash that you saved will buy less than it does right now, how would you protect it? Buying bitcoin is one possible answer. By the way, the fear is not deflation. Deflation would mean that your cash can buy MORE in the future. This is a devaluation, where your currency will buy less. China fears that they will need to print up large amounts of cash to bail out several bankrupt industries, and is attempting to devalue now to prevent a massive crash.

    • Devaluation isn't possible in deflationary currency. Devaluation only occurs in inflationary currency.

      The reason why BitCoin is working in China is because people don't want to be beholden to externally manipulated currencies and rapid devaluation. By moving their wealth to deflationary currency, they are taking a buy/hold approach to wealth accumulation. And wealthy people cannot be controlled.

      Guess what my prediction is for China? It tries to ban (make illegal) and confiscates BitCoin (and other Crypto Cu

  • Bitcoin isn't really designed for investment, in the buy-and-hold sense where you hope the value goes up.
    What it's designed for is making transactions, so you can buy and sell regular goods over the internet with lower transaction costs than credit cards or PayPal, and so you can buy and sell (ahem) less regular goods over the internet with much less traceability than credit cards or PayPal, even though you don't get the advantage of being able to cancel the payment or limit it to $50 if the seller defaults

    • Re: (Score:2)

      by Lennie ( 16154 )

      "what it's really not designed for is storing in a bank"

      Actually, a lot of people with more than just a little bit of Bitcoin print out an encrypted private key on paper and get a lock box at a regular bank. That does work.

    • Re: (Score:2)

      by Lennie ( 16154 )

      "Bitcoin isn't really designed for investment, in the buy-and-hold sense where you hope the value goes up."

      Just like any other currency, but they also get traded. Probably more than Bitcoin, because Bitcoin is still a small economy.

      • BitCoin is, by definition, deflationary currency. Because MOST people, including economists have no working knowledge of a deflationary currency, most people don't understand the value in human liberty. By working hard, accumulating currency that grows in value over time (rather than lose value) it allows people to be free from government manipulation of nominal fiat currency. And that is what you are seeing in China, and why you are seeing it.

        You can have a Yuan that can buy an egg today, but require two Y

  • Great News! (Score:3, Interesting)

    by American AC in Paris ( 230456 ) on Monday May 30, 2016 @03:48PM (#52212745) Homepage

    Because let's be honest--who doesn't want a currency whose value is 20% different than it was last week?

  • A 21% jump should worry people (Score:4, Insightful)

    by mhkohne ( 3854 ) on Monday May 30, 2016 @04:05PM (#52212839) Homepage

    Volatile currencies are only good for people who trade currency. People who are trying to get things done want a nice stable currency so they don't have to play day-trader on the side while running their business.

    • Re: (Score:2, Insightful)

      by angel'o'sphere ( 80593 )

      Hu?

      You don't grasp the concept of Bitcoin.

      If I sell on my website a car for 1.5 Bitcoins, you only need to consider what Bitcoins cost right now, decide if it is worth it. If so, buy the 1.5 Bitcoins and then conduct the transaction.

      Tomorrow the same car might cost 1.4 or 1.6 Bitcoins. Proceed as above, no risk involved for you.

      • Re: (Score:3)

        by Zocalo ( 252965 )
        If I'm using Bitcoin merely as a payment mechanism, e.g. I hold my cash in a "proper" currency and only convert it to Bitcoin in order to make the transaction for the car, then sure, I don't need to worry too much about wild fluctuations in its value - the spot price is good enough. It's worth pointing out that unless you adjusted the price of the hypothetical car in the interim it's now going to be 21% more expensive than it was when you listed it compared to that "proper" currency, so unlikely to be atta

        • Re: (Score:2)

          by Kjella ( 173770 )

          In that case, I'd be very alarmed about a 21% fluctuation - in either direction - in such a short timescale, because that kind of volatility in an actual currency never a good sign and usually indicates some severe financial problems, or even an impending collapse.

          Most of it is just the same boom-bust cycles as in the stock market, everybody wants to get in when it goes up and everybody wants to get out when it goes down. Central banks actually do quite a bit to stabilize the currency, with nobody to do that and very few having any kind of commitments in Bitcoins it will be volatile. For moderate amounts that is of course annoying but not deal breaking in that it's "win some, lose some". There's of course the chance of a death spiral since there's no real floor for h

      • In which case Bitcoin is like paypal without fees, and no its own "currency".

        Whenever you talk in terms of a currency you have to talk in terms of that currency being fixed in some form. I.e. like right now when I get paid in Euros but have a mortgage in dollars. That's that what it means to have a usable currency rather than just a payment service. When a true currency becomes that volatile you typically witness the wholesale exit of that currency, like in Iraq when people were basically doing anything in

        • What do you mean, without fees? I would have to pay a fee to transform dollars into bitcoins, pay the miner to put my transaction in a block today, and then whoever I am buying it from will take the money out of bitcoin and into dollars again: There's plenty of fees and delays in there. Given how much it costs to mine, I'd not be surprised if credit cards ended up being both cheaper and faster.

          So Bitcoin becomes a mix between a volatile currency and an expensive payment system: It's biggest selling point is

    • Mod up please

    • Bitcoin was only launched in 2009, so it's a little young for a currency. If you want to wait for a century before using it like old-world money, be my guest. In the meantime, I'll be enjoying all the technical and societal benefits of a truly distributed payment system.

    • Re: (Score:2)

      by Lennie ( 16154 )

      The problem is: Bitcoin is still a pretty small economy. So when something happens it will be reflected in the value in a big way.

  • There is no chance in hell I'm every using a currency that jumps 21% in 4 days, or even 21% in 4 months. Stability triumphs.

    • Re: (Score:2)

      by ledow ( 319597 )

      USD against EUR changed 10% in the last 6 months, and nothing particularly unusual is changing in either currency at this moment.

      https://www.oanda.com/solution... [oanda.com]

      20% in 4 days is rapid, sure, but fuck - an iPhone can change in price that much if there's enough demand, and it's still up in the air whether Bitcoin is a currency or a commodity like that.

      • 10% is less than half of this change, and that was over half a year. I stand by what I said.

      • The value that a USD will buy inside the US has moved less than 2% in the past year. One buys most of their stuff from within their own country. Suppose your mortgage fluctuated by 21% in four days. Would you be happy with that? What if it fluctuated the "wrong" way? Would you be donating your house to your bank?

    • Re: (Score:1)

      by Anonymous Coward

      I think the question is what is: A 21% change compared to what?

      Take, for example, Canada's dollar. It fell about 25% in around three months at the start of 2016 compared to the US dollar. But the US dollar was going up while Canada's dollar was dipping a little. Nothing really changed in Canada. Prices stayed the same, the job market was about level, there was no social change happening. It's just a fluxuation that happens about once a decade here when currencies travel in opposite directions (value-wise).

      C

  • When the music stops the people left holding the bitcoin will be the losers because Bitcoin is the pay-to-play version of musical chairs.

    It's never been worth anything and still isn't worth anything let alone $545, $525, or even $500.

    It's a VERY-TEMPORARY right-to-sell that keeps getting transferred from last week's sucker to next week's sucker.

    This is "timely /. news" in the same sense that Prince's hard drive may be auctioned off at some price.

    E

  • Bitcoin was only way to buy in. A bunch of eager Chinese bid price up. I suspect something similar.

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