Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities

Archives

Bitcoin Loses More Than $300 on Strong Volatility, Remains Above $2,000

May 26, 2017 at 18:08 by Yahia Barakah

The price of Bitcoin had a volatile day on Friday, a single day after the digital currency reached a new record high on Thursday before shedding more than $500 hours later. Bitcoin traded on Friday at about $300 lower than its record on Thursday, but maintained most of the rapid gains it achieved in recent weeks.

Bitcoin surged more than 100% in May due to strong demand for the digital currency in Asia. However, the huge gain forced Bitcoin’s volatility to go through the roof. These gains are increasingly looking like a massive bubble that could burst at any given moment, but investors continued to pour their funds into the virtual currency for fear of missing out on possible large profits.

Last Tuesday, the Bitcoin price received a powerful boost from an agreement that was made between Bitcoin firms and miners that raised confidence in the digital currency’s future. Digital Currency Group published a post on the same day that laid out details of the agreement, including lowering the barrier for the activation of Segregated Witness on the Bitcoin network to 80% of the network’s mining power.

Bitcoin firms are welcome to join the agreement, and as of May 25 there was 58 signed companies totaling 83.28% of mining power on the Bitcoin network. Some of the major names who signed the agreement are Abra, BTC.com, and BTCC, however, the list of supporting companies did not include Blockstream. The company funds the Bitcoin Core team that was behind the development of Segregated Witness.

The announcement of the agreement pushed the price of Bitcoin through the $2,400 and $2,500 milestones as the currency’s enthusiasts became optimistic about solving the Bitcoin scaling problem. Bitcoin further rallied on Thursday as investors, fund managers, regulators, and business executives met with enthusiasts of the virtual currency as a part of the Token Summit conference that took place in New York.

Meanwhile in Asia, demand for Bitcoin in Japan and South Korea remained very strong. Trades done with the Japanese yen accounted for about 30% of trading volume on Thursday, while Korean won accounted for 12%. The Japanese demand for Bitcoin has been on the rise since the government approved the digital currency as a legal method of payment on April 1.

Another factor that has been contributing to Bitcoin’s rally is the flight of investment from other cryptocurrencies that are more risky to Bitcoin, which proves to be more stable and established. Alternative cryptocurrencies such as Litecoin, Ether, and Ripple moved higher in recent weeks, but their risky nature makes investors prefer moving their profits into Bitcoin, according to Blockchain Executive Officer Peter Smith.

BTC/USD traded at 2,250.11 as of 17:55 GMT on Friday from 2,593.01 at 08:45 GMT, the pair’s highest level today. BTC/USD started trading today at 2,304.29 when the day began after touching 2,754.82 yesterday, which marked the strongest level for the pair in history.

Leave a Reply

required
required  

Navigation

Menu