Bitcoin in the News : 2016-06 More++

In the previous post, Bitcoin in the News : 2016-06 Price, I used a chart showing the wild price movements of bitcoin in June. How do the pundits explain those movements?

Fortune.com: 3 Reasons Bitcoin Is Booming Again (31 May 2016):-

• Mining bitcoin is about to get more expensive
• Hype over a new digital currency is reigniting interest in bitcoin [Ethereum]
• China, China, China [WSJ: 'two Chinese exchanges, now collectively account for some 92% of global trading in bitcoin']

Bloomberg.com: What's Driving the Bitcoin Rally? (17 June 2016; video):-

• China
• Brexit
• Halving
• 'Bitcoin adoption going global'

Fortune.com: As Global Currencies Plunge Over Brexit, Investors Turn to Bitcoin (24 June)

I count five explanations -- Halving, Ethereum, China, Brexit, Globalization -- of which the only reason that explains repeated, short-term volatility is China. Brexit was a one-off and the others are long-term trends. Here's more about China.

Nytimes.com: How China Took Center Stage in Bitcoin’s Civil War (29 June; Nathaniel Popper) • 'Bitcoin, which is both a new kind of digital money and an unusual financial network, is having something of an identity crisis. Like so many technologies before it, the virtual currency is coming up against the inevitable push and pull between commercial growth and the purity of its original ambitions.'

Shifting gears, I noted another story that appeared in June.

Forbes.com: 4 Reasons Why Bitcoin Represents A New Asset Class (2 June)

• Investability
• Politico-Economic Profile
• Correlation of Returns: Price Independence
• Risk-Reward Profiles

So far in this post, all of my news sources have been mainstream financial services, but this story was also picked up by bitcoin services, e.g. Why Bitcoin is a New Asset Class (cryptocoinsnews.com). The same source followed up an Australian story that I mentioned in Bitcoin in the News : 2016-05, and that should be closed on this blog: $22 million worth of Bitcoin sold in Australian-first auction.

There were a few other stories worthy of a slow-news month, which June wasn't. I'll pick them up for July if they show any persistence.

Bitcoin in the News : 2016-06 Price

In the previous post, Stores of Value,

[I] discovered that the bitcoin price spiked as the result of the [Brexit] vote became known. Since the price of gold also spiked, I wondered if there was any correlation.

Looking at the bitcoin price for the entire month of June shows plenty of unusual action.

BTCUSD=X Interactive Stock Chart - Yahoo! Finance
June 2016

First, consider the spike separating the left third of the chart from the rest. Since the bottom of the spike is marked 10 June (Friday) and the top is marked 13 June (Monday), the action occurred over a weekend. From Bitcoin Price Hits Two-Year High (wsj.com; 13 June 2016):-

The price of the digital currency bitcoin hit a two-year high Monday, trading above $700 for the first time since 2014, after it jumped 21% over the weekend. The surge came days before an unusual event called the "halving", an adjustment to bitcoin’s protocol designed to control the creation of new coins.

Next, note the sideways move followed by a peak for the month on 17 June. From Tumultuous Week Fuels 30% Gain in Bitcoin and Ether Prices (coindesk.com; 17 June):-

Bitcoin and ether both surged this week, the former hitting a 28-month high and the latter surpassing $20 for the first time. The combined rally of these two digital currencies from 10th June to 17th June helped shed further light on their relationship, a matter that has frequently drawn the attention of market analysts.

Next, there is a long slide into a trough dated 23 June, where the price fell to pre-spike levels. From Bitcoin Price Drops Below $600 As ‘Brexit’ Hopes Falter (coindesk.com; 23 June):-

The price of bitcoin fell $100 during a five-hour span today, dropping 15% to reach a low of $551 on the CoinDesk Bitcoin Price Index (BPI). The move represents a continuation of the recent price correction that began when bitcoin hit a high of $774 on 18th June, a move market observers suggested was indicative of the idea that the digital currency was "overbought" after reaching two-year highs.

Finally, the price rebounded and retraced half of the value lost after the month's peak. From As Global Currencies Plunge Over Brexit, Investors Turn to Bitcoin (fortune.com; 24 June):-

Global currencies might be plunging in the wake of the historic Brexit vote, but it’s had a much different effect on Bitcoin. Bitcoin, the cryptocurrency that had been plunging in recent days, is soaring on Friday after the Brexit vote.

Although the Brexit explanation makes some sense, it was preceded by big moves up and down that defy explanation. I doubt that the 'halving' played much of a role. Something else was behind the moves.