Blockchain news. Why has Bitcoin grown so high again? Some speculations to the topic.
Bitcoin is pushing to new highs 2019 and the earlier story of unprecedented price levels for the cryptocurrency seem to be repeating themselves again.. The top cryptocurrency went from a 2019 low of $3.1k to above $12k and back to 10.6k at the time of writing. Facebook’s Libra project has conquered the front pages of all news platforms. It is likely that you and your friends are tempted to start buying surrounded by this new wave of interest and activity, a phenomenon also known as FOMO or “fear of missing out”. The good news is that this phenomenon is completely logical! However it is advisable to wait and get informed first before taking action.
You have probably heard a lot about Bitcoin and little about the rest of the crypto assets. This crypto ‘universe’ looks like a completely separate, digital, even virtual realm. A lot of early crypto adopters truly believe that money will soon cease to exist in the form we know it today. Some of them would also say the same about banks. Perhaps there is some truth in these speculations, but similar prophecies were made about how the Internet would manage to turn the world upside down that did not fully materialize in the end. After all, any new technology ends up integrating with the “old world” even if it disrupts it at first.
Taking a more realistic view, the crypto world doesn’t exist in isolation. A good example of the integration of crypto with the traditional economy is its behavior contrasted to major events that influence other markets. As a useful example, let’s have a look at the most recent news that drove traditional markets down — the trade war between China and the USA. Analytics say there is a clear statistical correlation between the drops on the stock markets and the rise in the crypto market as a response to the reciprocal trade war attacks. Correlation doesn’t necessarily mean that there is a cause-effect relationship, but there are two main reasons why we believe Bitcoin could be considered a safe haven asset by investors all over the world in such circumstances:
- Bitcoin a good alternative to national currencies because it doesn’t depend on any government or corporation to control and manage it. People living in countries with unstable economies and operating currencies with high inflation rates may benefit from this decentralization.
- Bitcoin is a good alternative to gold. Gold has always been a last resort for investors, but its low liquidity and high storage costs make it a highly cumbersome investment.
However, crypto is still a nascent industry and laws and regulations are still one or two steps behind. While at times it may seem almost indistinguishable from trading traditional instruments like stocks and bonds, the truth is that there’s more to it than meets the eye.
Recent reports indicate that almost 95% of global traded volume is FAKE! This means that while Bitcoin’s price is real, only 5% of trading transactions can be trusted, as it is the amount that takes place on fully verified and reputable exchanges. This maneuver is known as wash trading, where the actual amount doesn’t change hands between multiple actors, but only a few select actors moving the same money to generate fake volume and notoriety. While this practice may not sound that bad at first, it potentially points towards a deceitful culture and nefarious future intentions. Coupled with the long list of recently hacked and compromised crypto exchanges, any beginner should be very conscious of the pitfalls and dangers of giving your trust and personal information to an unknown, shady company with an unproven track record.
This is why it’s critically important to choose fully regulated platforms like Lykke. Lykke is a Swiss exchange whose reputation and operations are founded primarily around the concept of compliance and regulation. It’s a small but well-established exchange that has never been involved in wash trading or any other kinds of unregulated or illegal behavior. Lykke is one of the 10 exchanges verified by the Blockchain Transparency Institute, the list which you can access on the Institute’s website. Of all the 10 exchanges, only Lykke has 0% trading fees. This is an enormous advantage for beginner traders as you don’t have to understand the system of “taker” and “maker” fees, and you do not need to do research on the web each time before you perform a trade to find out how much a fee you will be paying.