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It Is One Step Forward, Two Steps Back as Bitcoin Ends 2013

December 21, 2013 at 23:20 by Wade Powers

There has been mixed sentiment amongst the Bitcoin Community in the last week, as 2013 winds to a close.  China has become a source of major concern to speculative investors, with investors worried that recent rulings by the Chinese Central Bank, will significantly impact the growth of Bitcoin.  The fallout from those rulings has become more concrete in the last few days.  In a recent Bloomberg News Article, Litecoin creator and head of BTC China Bobby Lee said, “We’ve suspended customer deposits.”  The article contains lots of follow up details for those interested, but those four words are damning.  The second largest economy in the world has just declared that Banks and other Financial Institutions cannot process BitCoin transactions.  In the last week, according to an open letter from Lee, third party payment processors have also withdrawn service from BTC China.  Lee’s open letter also stated BTC China are working on solutions, and are more than willing to work with the Chinese Government to alleviate their concerns.

Furthering the gloom in the past few weeks has been the addition of calls for regulation.   The New York Times posted an article by Nathiel Popper and Neil Gough two days ago, in which it highlighted the concerns of nations about the speculative nature of BitCoin.   Said Popper and Gough, “European Banking Authority and the authorities in Denmark, Norway, Australia and New Zealand have all raised an alarm about the speculative nature of the new online currencies”  While many large investors point to the advantages of regulation, in the short term it has certainly shaken investor nerves.  The volatility of the last 5 days, shown here on bitcoincharts.com, led a suicide hotline number to be posted on the popular reddit.com/r/BitCoin subreddit.

5 Day Chart

Meanwhile, there have been many positive developments sure to bring those bullish investors out.  Very positive news came out of the United States last month, as Bitcoin proponents testified in front of Congress about the potential of Bitcoin.  The Hill reports that  Federal Election Commission regulators were deadlocked 3–3 on whether to allow BitCoins to be donated to political campaigns.  “The FEC vote is sort of good analogy for how the government is looking at bitcoin,” said Jerry Brito, a senior research fellow at George Mason University’s Mercatus Center. “They’re not saying no; they’re not saying yes either.”  With the take down of illicit BitCoin only site “The Silk Road”, many expected congress to have a much less open mind to BitCoin’s legitimacy.  Having started as a way to decentralize currency, Bitcoin’s future certainly looks to be pointing towards regulation.

Another major development has been the implementation of BitCoin in everyday transactions.  BitCoin proponents have to be excited by the announcement that Overstock.com would be allowing BitCoin transactions in the second half of 2014.  At TechCruch Matt Burns Reported, “Overstock saw just over $1 billion in revenue last year.  The company trades on NASDAQ and its stock price is up 109.29% on the year. The news about accepting Bitcoin caused the shares to jump 7.77% on the day.”  This is certainly big news by the way of BitCoin acceptance.  Large companies, like Overstock.com, give legitimacy and exposure to BitCoin.  This can only leave investors salivating over the prospect of Amazon.com coming aboard next.

One Response to “It Is One Step Forward, Two Steps Back as Bitcoin Ends 2013”

  1. Gitle

    Rather than one step forward, two steps beck, I’d say the opposite. There have been problems, but in general 2013 has been a huge year for bitcoin, awareness has multiplied and lots of serious businesses and organizations have started acknowledging or even accepting it. The good outweighs the bad.

    [Reply]

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