Political chaos in Italy and Spain. Global stock markets start tumbling. So Bitcoin starts rising? This week, Italy’s populist coalition, the anti-establishment Five Star party and the right-wing League, tussled with the country’s president over the formation of a government.
In Spain, the ruling party was found to have been involved in an illegal kickbacks scheme, which ultimately cost Prime Minister Mariano Rajoy his job. Many started to predict the beginning of the end for the EU and markets accordingly crashed across the world.
But not in crypto.
At the start of the week, many observers, including indeed us at The Chain, predicted Bitcoin was going to continue its downward slide and the start of June would see it slip below the $7,000 milestone price point.
The pessimistic prediction was based on the back of news this week – that the US Department of Justice has opened a criminal probe into whether traders are manipulating the price of digital currencies – and also last week’s news about North American securities regulators launching “Operation Crypto-sweep.”
The Crypto-sweep probe, by 40 different state- and provincial-level US and Canadian regulatory bodies, has already launched 70 investigations into alleged crypto-currency scams and fraudulent ICOs, and claims this is “just the tip of the iceberg.”
On May 29 Bitcoin dropped to $7,043 on US markets. As the political shenanigans in Italy reached crisis point on the 30th, it then suddenly rallied and has yo-yoed upwards every since and now sits at $7,600. So why did crypto jump when all other assets sank?
Some have pointed to President Xi Jinping’s speech on Monday to the Chinese Academy of Sciences that said blockchain – alongside artificial intelligence, quantum computing, mobile communications and the Internet of Things – had the power to “reconstruct the global innovation map and reshape the global economic structure.”
Others said the price spike was because of the upcoming month-long FIFA World Cup tournament that kicks off in Russia on June 14. Because of the raft of international financial sanctions against Moscow, the many thousands of soccer fans traveling to the event from across the globe are purportedly preparing to spend Bitcoin instead of cash and this, supposedly, will prop up its price for the next few weeks.
The crypto hardcore, however, say the price rise is down to another prediction from the Machiavellian Bitcoin enthusiast and software entrepreneur John McAfee, who said on Wednesday that because “institutional investors are preparing to enter the cryptocurrency market with a vengeance,” the top 10 crypto tokens are about to “go through the roof fairly quickly.” McAfee said on June 30 that Bitcoin will be trading above $15,000 by June 12 and, hey presto, its price started moving up.
As ridiculous as it may seem, McAfee’s regular shoot-from-the-hip statements do often move the crypto markets. Which brings us on to another possible explanation.
Peter Tchir, trader, crypto-commentator and Forbes columnist, argued last year that there are three rules of Bitcoin.
Rule one is “Bitcoin is Smarter Than Me.” Rule three is “The Sustainability of Bitcoin’s Advantages are Questionable.” And the middle rule? “There Are No Rules.” Which possibly is all we need to know.
So maybe this week’s spike rise was multiple Russian and Chinese billionaires piling back into Bitcoin as all the other markets sank? Or not? Maybe it’s to do with North Korea? And maybe it’s not. Time will tell. Or maybe it won’t.
Please contact us with feedback, news or stories: thechain@atimes.com