Crypto Trader and the Bitcoin Prize: Is there a connection?

After weeks of calm around the Bitcoin price, the Bitcoin price reached the 257 US dollar mark again for the first time on 17 June.

Market observers paid particular attention to the pace at which the share price rose on 16 June between 13:00 and 15:00 UTC. Although such price fluctuations are not uncommon in the Bitcoin industry, the recent uptrend has seen speculation of a larger market movement.

One of the best-known theories for the sudden rise in Bitcoin’s price is timing with the possible imminent Grexit should Greece fail to meet its commitments.

This crypto trader behaviour in relation to international crises is not a new phenomenon in the Bitcoin industry:

Already during the Cyprus crisis in early 2013, Bitcoin and other crypto trader currencies were used as protection against price fluctuations of the Fiat currencies and the crypto trader exchange rate recorded an extreme rise.

Joshua Scigala, CEO of Bitcoin/Gold exchange platform Vaultoro, agrees that there may be a connection between the current price development and the possible Grexit, if only psychologically:

“It’s a typical meeting point. During the Cyprus crisis, not all Cypriot citizens exchanged their money directly for Bitcoin. It was more like many said ‘Hey look, Cyprus is in trouble and we are seeing a rise in Bitcoin and other assets’.

Bitcoin price

Nevertheless, the connection between the Bitcoin price rise and the possible Grexit was very quickly picked up by the press and Reuters also published an article on the current discussion.

UK Digital Currency Association Chairman Paul Gordon believes, however, that it was simply a coincidence that the Bitcoin price skyrocketed at a time when speculations about a possible Grexit were growing louder. “There is simply too little evidence. Of course, it’s nice to be able to say that the price per bitcoin has risen due to the Greek crisis, but it could just as well have gone down.”

Nevertheless, the question is whether the months long downward trend since the Bitcoin high in 2013, with the recent price rise has found its turnaround.

It is probably still too early to say whether the recent price movement indicates the awakening of a giant, or whether it was just a loud snoring of the giant in deep sleep.

Analyst optimistic about Bitcoin loophole – 50 percent opportunity

Analysts from well-known financial institutions and Bloomberg believe that the probability of success of the Winklevoss Bitcoin ETF COIN is now relatively high. The reason lies in the unpredictability of the US Securities and Exchange Commission (SEC).

There are many more parts of the Bitcoin loophole that are under development

Some of these parts could have a major impact on the Bitcoin loophole welcoming the world’s first Bitcoin loophole. Other parts, on the other hand, could completely eliminate the likelihood of getting through.

Based on the SEC’s previous decisions regarding innovative ETFs, it is difficult to say to what extent confirmation of the Winklevoss ETF can be achieved. But the involvement of a respected 30 billion US dollar financial institution, the participation of independent analysts, and Quant Trader from KCG and Susquehanna give hope.

In recent years, Bitcoin has made a name for itself as digital gold. However, it is still in the process of fulfilling its technical potential to become an efficient and affordable processing network. For this reason, the majority of Bitcoin users use the current Bitcoin network as a means of protecting their wealth or carrying out large transactions that would not have been possible without a middleman.

Why analysts believe in the Bitcoin ETF

As Bloomberg Intelligence senior ETF analyst Eric Balchunas said, the SEC has already introduced ETFs in the past that have not yet opened a new market and at the time did not arouse any interest in the industry. One example is the ETF ASHR, which was approved by the SEC authority before US companies got into action.

Balchunas said:

“The probabilities are so high. You get possible regulatory, financial and security problems, but ETFs have a long history of opening up new markets because of that. A great example of an ETF approved by the SEC is ASHR. It was approved before the US companies really knew about it.”

As Spencer Bogart, Vice President of Equity Research at Needham & Co, already mentioned, the opportunities for the Bitcoin ETF are almost equal. This can be deduced precisely from the fact that the officials at the SEC would not receive any advantage/disadvantage from the ETF. Should the ETF fail and destabilize the market, however, the officials will be called to account.

Until the deadline Bachunas sees the chance for the Bitcoin ETF at about 50 percent. The Bitcoin industry and community are quite optimistic about the Bitcoin ETF. This is mainly due to the work the Winklevoss twins are putting into it, as they have now even commissioned a reputable financial institution on State Street to maintain and audit the ETF.

One advantage Balchunas sees in the ETF is the lower premium you pay over other public Bitcoin instruments. As you can see on the Bitcoin over-the-counter (OTC) market, instruments like the Bitcoin Investment Trust (GBTC) are traded at high premiums on the large regulated markets.

GBTC is currently traded at USD 129 per share, which corresponds to a price of USD 1,290 per Bitcoin. At editorial time, a Bitcoin is traded at 1,250 US dollars.

“If it’s a bit like high-yield bonds, you would have to trade Bitcoin ETFs at a premium of 1 to 2 percent, which would still be better than the OTC market,” Balchunas finally added.