Bitcoin Weekly 2013 December 10: BoA gives BTC a $15b market cap, China didn’t ban bitcoin, Snoop Dogg gives props
As the value of BTC continues to hover around $1,000 more and more parts of the financial industry are beginning to wake up to the effect and practicality of virtual currency–and recently this means that Bank of America put it sights on Bitcoin by placing a market cap of $15 billion on it. Although news from China seems to have been grave, people actually in country–and capable of reading Chinese–have come back to say that the “warnings” weren’t alarming at all. And what do Ashton Kutcher, Snoop Dogg, and Krusty the Clown have in common? They have all promoted bitcoins in some way.
All this and more on today’s Bitcoin Weekly.
Bank of America Merrill Lynch valuates Bitcoin
In a move that will likely be followed by other financial institutions around the world, Bank of America Merrill Lynch has released a valuation for Bitcoin citing a price point of $1,300 per BTC and a market cap at $15 billion. This comes at a point where some uncertainty with Chinese banks and still surging popularity of Bitcoin in general has generated some interesting plateaus around the breakthrough value of BTC upon exceeding $1,000 (still a little short of that $1,300 value predicted by BoA.)
Numerous times now, the sudden rise of Bitcoin value has been led by the media (and potential investors) as a “bubble”; but each time the value rises and corrects, the value itself tends to stray higher. A longitudinal look at BTC value over the years shows that it is steadily rising along a logarithmic price path.
“The yellow line is rising at +0.825% daily, though obviously this price path persisting in perpetuity isn’t going to work forever,” notes SiliconANGLE’s founding editor Mark ‘Rizzn’ Hopkins. “It’s important to note that this price path is logarithmic, and it’s the right way to view large magnitude movement.”
The upward value trend of BTC is often also directly tied to cycles of popularity, adoption, and interest amidst merchants and consumers. The addition of Chinese interest saw the value jump enormously and there’s still lots of audience available amid merchants and potential consumers not yet tapped that could push the value even higher.
With each cycle more traditional financial institutions talk about Bitcoin, some flirt with adoption while others actually climb on board. As eBay, Western Union, and others speak about Bitcoin it will only continue to open up new avenues of interest—digital currency is part of our future, Bitcoin or not.
What is really going on in China?
Last week saw “warnings” about Bitcoin cited to the People’s Bank of China about the use of Bitcoin. This was widely reported as China either banning, restricting, or tightly regulating BTC trade in country. The case happens to be that China instead legally defined Bitcoin and Joseph Wang says, “The People’s Bank of China has basically given the green light for Bitcoin trading and exchanges.”
The important takeaway of this news isn’t the regulation (or so-thought “ban” on the currency) but that China has defined Bitcoin not as a currency—as the United States and parts of Europe are beginning to view it—but as a commodity.
This is important because in both Hong Kong and mainland China non-Chinese currencies are not legally permitted for value exchange. In analysis, a big reason why China has defined Bitcoin as a commodity is to fence it off from the primarily financial (currency) market and therefore Chinese financial interests. Doing this allows them to keep BTC in its own space that isn’t tied to Chinese currency and therefore if Bitcoin suddenly implodes it won’t cause a sudden change for China’s economy.
According to Wang, Bitcoin being defined as a commodity by China does the opposite of banning it from exchanges and opens up the opportunity for investors to know that the way is clear.
Snoop Dogg and his upcoming Bitcoin EP and other celebrity tweets
We live in a strange era because it’s rare to discover celebrity endorsement of a currency but this is going on right now. Recently, hip hop legend Snoop Dogg, a.k.a. Snoop Lion, has tweeted his intent to make his next album available to people who want to purchase it with bitcoin.
Actor Ashton Kutcher tweeted in support of Jon Holmquist’s Bitcoin Black Friday (a merchant-consumer bitcoin extravaganza set on the “merchant holiday” of Black Friday, November 29.) Even FOX’s The Simpsons has gotten on board with a recent episode where the character Krusty the Clown mentions the cryptocurrency.