Bitcoin prices have once again bounced off the important $550 figure. Earlier today, BTC/USD traded to a low of $555 before rebounding. Since reaching the lows, bitcoin gained and is currently trading 20 points higher at $576.60 per coin on BTC-E. As usual, prices are slightly higher on BitStamp at $582 a piece. Here is today’s reversal on BTC-E.
Despite the large move up today, we can’t call this a rally until BTC climbs back above $600. On the lower end, another test of $550 may result with prices finally breaking the barrier.
There has been a lot of talk in the crypto community about the potential impact of today’s Argentina bond default. Talks between the Argentine government and creditors failed today, triggering a default. The Credit default swaps used to protect against losses from Argentine default over the next 3 months become the most expensive in the world yesterday, with a cost of $4.2 million to insure $10 million of debt. While we wouldn’t exclude the possibility that bitcoin prices were helped by this event, we don’t think that this will have a lasting impact on prices going forward.
Few things to consider. Bitcoin adoption and use is almost non existent outside the Western world plus China, with most of the innovation and adoption occurring in the United States. While it is certainly possible that Argentina’s raging inflation of 40% per annum will force people into other financial assets and away from the Peso, most of them will probably switch to a known paper currency alternative like the US Dollar. In addition, it is highly unlikely that the default will lead to increased bitcoin adoption in Argentina as the country had experienced high inflation even before the default and ordinary Argentinians didn’t switch to bitcoin. In short, we expect the long term implications on bitcoin prices to be muted.
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