Thanks for joining us for this edition of our news roundup. In this edition, we recap on headlines covering bigger picture price predictions, bitcoin ETF basics and the much anticipated SEC ruling, plus we touch on some of the developments unfolding for bitcoin in Venezuela and Nigeria. Keep reading to find out!
Bitcoin Price Predictions
2017 is showing just how resilient and fierce Bitcoin is. To get a true sense for the bigger picture, a Seeking Alpha article advises evaluating both price analysis and fundamental analysis metrics. Yes, the “steep rally of 2013” is significant to contrast with the “slow and steady rise in the last 2 years.” But, fundamentally, data demonstrating a rise in acceptance is most helpful. The results from their bigger picture research show bitcoin is becoming less of a speculative market and is gaining in legitimacy and acceptance. Since investors prefer a slow and steady rise versus dramatic fluctuations, the article notes a healthy price correction would be beneficial to encourage investor confidence. Will we see a $2000 price point in 2017? They speculate that it’s quite possible.
A common argument and relevant concern from bitcoin’s naysayers during record price hikes is that a bubble is building and a dramatic plunge in price is imminent. Joon Ian Wong asserts it isn’t likely this time around. In a recent Quartz piece, he refers to a scale developed by global equity investor and Yale Lecturer, Vikram Mansharamani, to illustrate this further. According to Mansharamani’s scale and his own LinkedIn post on the topic, bitcoin scores a total of 1.5 out of 5. In other words, a bubble could develop, but it doesn’t appear to be right now. A helpful rehash of notable bubbles in bitcoin’s history can be found here.
ETF Ruling: Can bitcoin deal with rejection?
Sanity prevailed & the SEC denied the Bitcoin ETF application. It was premature – next year! Time to focus on fixing the community divide! https://t.co/WgEvsYe9hT
— Vinny Lingham (@VinnyLingham) March 10, 2017
Taking center-stage in the headlines, alongside the recent price, has been the much anticipated ruling on bitcoin’s first ever US-issued exchange-traded fund (ETF). The SEC, which has rejected the Winklevoss twins’ application for a bitcoin ETF, handed down the verdict on March 10th after several years of deliberation. As per a New York Times article, their reason for rejecting stems from “concerns about the potential for fraudulent or manipulative acts and practices” in such an unregulated market. In the lead up to the SEC’s decision, opinions have been quite polarizing, with some feeling optimistic about a bitcoin ETF and approval likelihood, and others taking a more pessimistic view. If you want to hear both points of view, Forbes contributor Laura Shin gave the stage to an optimist and pessimist on her podcast, Unchained.
Anyone less seasoned on financial markets and SEC policy may have (at least) several questions, like “what’s an ETF?” and “what are its pros and cons?” Previously featured guest blogger Ofir Beigel takes a beginner-friendly approach to answering these questions in his recent post covering ETF basics. A more detailed Q&A can be found in an ETF.com interview with Spencer Bogart, who represents the pessimist’s side of the conversation in Shin’s ETF podcast episode. Bogart saw the possibility of approval at less than 25%.
Long time bitcoin pioneer, Vinny Lingham, also resides on the pessimistic side and suggested odds of 10-15%. Lingham does not see an ETF approval as being in bitcoin’s current best interest, and he speculated that such an event could trigger the next big boom and bust cycle. Both ETF pessimists agree rejection would have minimal price impact, with estimates ranging from roughly 10-15%.
On the opposite end of the spectrum, public comments received by the SEC show a 72% majority support the ETF approval. Objections among the remaining 28% center around network concerns, like the lack of consensus around scalability solutions. Philip C. Chronakis, Attorney and Adjunct Professor of Law, admits that rejection will not stop the progress of bitcoin. However, he sees approval as a way to prioritize the development of bitcoin as an investment asset. Co-Founder and CIO of Toroso Investments, Mike Venuto, saw a greater than 50% chance of approval and holds an optimistic viewpoint of what could happen post-verdict. While both crowds waited for the final word from the SEC, bitcoin will continue to power forward regardless of what happens.
And how has the price faired since the ETF rejection? The price did see a tumble to around $1,060 USD, but bitcoin made the upwards climb over the weekend and currently sits around $1,213 on Bitfinex. Bitcoin enthusiasts are seeing this as a “small bump in the road” and further demonstration of its resilience (or “street cred“) as an unregulated currency.
Relief for the unbanked
Previously, we recapped the economic crisis and bitcoin activity in Venezuela. In light of the government’s recent bitcoin crackdown, those who use it are staying silent to remain undetected. Despite the silence, trading volume on LocalBitcoins in the region has spiked dramatically, which is likely due to SurBitcoin temporarily suspending operations. According to an update from the country’s largest exchange, they expected to be back to normal as early as last week and recent responses to users on their Facebook page indicate they are working as quickly as possible to resume operations.
Like the government of Venezuela, the Central Bank of Nigeria (CBN) has also shown a not-so-friendly reception to bitcoin and other virtual currencies, however interest has continued to grow in Nigeria. Reportedly, key factors fueling bitcoin activity include decreasing value of the Naira and the unfortunate rise in ponzi schemes like MMM. Another potential driver for more bitcoin activity in Nigeria and beyond comes after Bitwala announced users can now send bitcoins to mobile money accounts in four African countries, for free.
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