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In search of answers

[Bit]coin flipping: Bitcoin price passes $500 for the first time in almost two years

Gabriela Motroc

Let’s call it a deja-vu. Bitcoin price passed the $500 threshold in late May, something which hasn’t happened in almost two years. Four days after the sudden boost, the price is still bigger than it was in August 2014 —the last hike—. Specialists are still trying to find the reason behind the unexpected increase, with some claiming that Chinese investors’ actions may have led to this dramatic surge.

If people knew the reason behind Bitcoin’s hikes and declines, this cryptocurrency could lose its “unstable” label. Since there is no way of knowing what triggers the surges, we can only state the facts and speculate. The latest surge occurred on May 28 between 06.00 and 06.14 UTC and reached a high on $531.70 for the day. Saturday’s move is a nearly six percent increase from Bitcoin’s opening value of just over $470, a sudden increase which added to a 4.3 percent boost which occurred on May 27. At press time, the price continued to shock both Bitcoin enthusiasts and haters ($532.14).

Reason No. 1: “Blame” it on China

Conditions in Asia may have influenced the Bitcoin price, which recorded a massive surge on May 28. Many experts believe that fears in China that the yuan could weaken may have something to do with the sudden growth. China’s decision to restrict the flow of cash out of the country has indubitably prompted concerned citizens to seek ways around capital restrictions and Bitcoin proved to be a sort of safe haven.

Du Jin, chief marketing officer at Huobi, told The Wall Street Journal that the “hot money in China has to go somewhere.” Growing concerns regarding yuan deflation may have prompted people to perceive Bitcoin as an alternative to pouring their cash inside the country (and eventually losing it as the yuan depreciates). Low confidence in this currency could be the reason behind the Bitcoin price hike.

Reason No. 2: Bitcoin halving

This is not a popular view, but some people believe that Bitcoin’s upcoming halving may be the reason behind the cryptocurrency’s latest surges. However, if we look back at the last halving which took place on November 28, 2012, it had no substantial effect on the price of Bitcoin. Although an increase due to the upcoming halving should not be excluded just yet, the impact of this event depends on a plethora of factors, including the digital currency’s transaction volume.

Perfect timing: Sale of $16 million AUD in Bitcoin to occur this month

Two days after the surge, Ernst & Young, a multinational professional services firm with the headquarters in London, announced that it has been engaged to start an international sales process to sell roughly 24,518 bitcoins represented about $16 million AUD. According to the press release, the sale will be conducted via a 48-hour sealed bid auction beginning at 12.01 a.m. AEST on June 20, 2016, and finishing June 21, 2016, at 11.59 p.m. AEST. Those who are interested in bidding can submit bids on 11 lots of 2,000 bitcoin and one lot of roughly 2,518 bitcoin.

Interested parties can submit their interest in participating in the sealed bid auction via email at project.exchange@au.ey.com. Expressions of interest close on June 7, 2016; interested parties are required to submit additional information by June 10, 2016.

Author
Gabriela Motroc
Gabriela Motroc is an online editor for JAXenter.com. Before working at S&S Media she studied International Communication Management at The Hague University of Applied Sciences.

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