Every other day Bitcoin seems to be smashing through price levels. Articles, including here, are being churned out that almost amount to simply changing $8000 for $9000, $10,000, $12,000 and so on. They all start with the same excited disbelief the new price level has been passed and all mention the cries of ‘tulips’ and ‘bubbles’ that warn a crash is imminent. They also all mention the impending launch of Bitcoin futures trading on major, respected and mainstream exchanges in the U.S. later this month acting as the catalyst.
But what is a journalist to do? The price of Bitcoin just keeps on rising, most recently by a $1000 or more a day. And the same arguments warning about a crash as well as those arguing against a bubble and that it is simply the cryptocurrency hitting tipping point don’t change. There has genuinely been no new major catalyst to report, either for the Bitcoin bulls or bears, in recent days. Which could suggest it’s simply market euphoria, and a bubble, or that momentum is gathering and Bitcoin is going mainstream. And those two scenarios are of course the same ones we’ve been weighing up for a few weeks now.
With the CBOE exchange set to launch Bitcoin futures on Sunday, many analysts are now forecasting prices will keep rising in the meanwhile, though at this stage no-one is being brave enough to say to where. Technical analysis also provides little in the way of clues as Bitcoin’s price has been moving so quickly over the past couple of weeks. Previous patterns of corrections following major round number levels being passed have also not repeated since the $5000 barrier.
The meteoric rise is, however, having some negative impacts on Bitcoin’s use as an actual currency. Steam, the computer game platform, today announced that it was halting its policy of accepting Bitcoin as payment for games. The huge rise in Bitcoin’s value has seen transaction fees also multiply. When Steam started supporting Bitcoin, transaction fees for customers were $0.20. They are now $20, which is more than the cost of many games. The level of volatility is also an issue, with Steam releasing the following statement:
“Historically, the value of Bitcoin has been volatile, but the degree of volatility has become extreme in the last few months, losing as much as 25% in value over a period of days. This creates a problem for customers trying to purchase games with Bitcoin. When checking out on Steam, a customer will transfer x amount of Bitcoin for the cost of the game, plus y amount of Bitcoin to cover the transaction fee charged by the Bitcoin network. The value of Bitcoin is only guaranteed for a certain period of time so if the transaction doesn’t complete within that window of time, then the amount of Bitcoin needed to cover the transaction can change. The amount it can change has been increasing recently to a point where it can be significantly different”.
It would be ironic if Bitcoin’s soaring value actually prevents it, at least in the short term, from being viable as a medium of exchange.. Those who have, however, been investing online in Bitcoin look like they are in for a rollercoaster ride of emotions for a while yet!