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Global Markets Volatility Weighing Down on BTC

And so we are back after a short summer hiatus, that took us, by way of bustling Bangalore to sunny Singapore right on the equator. Asia is clearly the heart of crypto, in a way that USA (and NYC specifically) is still very much at the centre of modern global finance. The crypto winter has surely had an impact, but if the turnout at ETHGlobal’s recent Bangalore edition of EthIndia was anything to go by, there is increasing interest in all things crypto and blockchain on the ground across Asia, which regulators would do well to take note, especially in a week in which India’s Supreme Court is hearing arguments from the RBI as well as from the crypto community.

Last week, Bitcoin experienced its worst week so far in 2019 as the prices fell by about 20%. A stark rise in geopolitical tensions fueled by civil outrage in HK and the continuing US-China trade conflicts have spiked up volatility in markets across the board, resulting in an inverted yield curve – a traditional harbinger for an economic recession in the short-term. Bitcoin is not yet immune to rising volatility in global markets and prices have retracted sharply as investors abandon risky asset classes in a global risk-off trade. We have already seen this happen in a few instances in the past when a sharp increase in the VIX last November drove down BTC prices from a stable level of $6k to new yearly lows for 2018. With the next big bullish driver – mining reward halvening – still some time away, we expect BTC prices to closely mirror the global macro in the short-term. 

BTC Volatility

Besides the popular theory around the macro headwinds, an alternative one for the fall in BTC prices is the furious selling of BTC on exchanges by an alleged Ponzi scam in China. Dovey Wan in her tweetstorm delved in to the 200k BTC PlusToken exit scam that is finding its way to Chinese exchanges, resulting in a sharp drop in BTC’s price. If the allegations are true, the sheer quantity of BTC that is being sold on exchanges could be the primary cause of the price decline the past week. 

Dovey Wan Twitter Post

Crypto Twitter Pick

What We’re Reading / Listening To

The Nightmare of Disintermediation by Jill Carlson
The IMF on How to Design Central Bank Digital Currencies

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