A Wild Week for BTC as the Bitcoin Price Swings
It was, without question, a wild week for Bitcoin—and a wild week for people who buy Bitcoin. How wild? At Coinmama we couldn’t keep our eyes off the prices. Coinmama recently took a look at Bitcoin’s price history in an effort to make a more educated decision as to when to buy Bitcoin (BTC). How did last week do through that lens? We take a look at all that and more…
Bitcoin Price Volatility Returns
Shortly before midnight on Saturday, June 22nd, the Bitcoin price jumped above 10,000 USD for the first time in over a year. Following a long slump, people have been enthusiastically buying Bitcoin since the beginning of April, but passing the psychological hurdle of 10,000 USD helped rally the troops. Once it hit 10,000 USD, the Bitcoin price couldn’t stop; by Saturday afternoon it climbed briefly over 11,000 USD, as everyone scrambled to buy Bitcoin in anticipation of another rally like the one in 2017.
The Bitcoin rate then calmed down a bit, settling just above and below 11,000 USD, but by Wednesday we were looking at another massive spike, as the Bitcoin price climbed from 11,300 USD to 13,700 USD over the course of 24 hours, before dropping 1,000 USD in an hour, and continuing its drop. After some roller-coaster rides, we closed the week out with Bitcoin hovering around the 12,000 USD mark. (Though the price keeps dropping, and as we enter a new week, Bitcoin has dipped under 11,000 USD.) Still, despite the drop, anyone who was lucky enough to buy Bitcoin during crypto winter—or even earlier in June—is likely happy with their investment.
So what caused the massive jump and then its fall? Last week we took a look at some of the factorsthat affect the BTC price. Among them:
Hype. More than anything else, the public’s perception of where the BTC price is going, helps drive what the BTC price actually is. After all, if people are predicting an upward swing, they’ll likely buy Bitcoin and drive the price further up. If people are predicting its fall, they’ll likely try to sell Bitcoin before the drop, contributing to its downward trend.
Supply and Demand. This goes hand in hand with hype. And it’s often a game of “which came first.” Is the hype caused by low supply and high demand, or does the high demand cause the hype? Whichever way you look at it though, the price is directly linked to how much people want to get Bitcoin, and how much Bitcoin people have.
Regulations, News, etc. There’s no question that what’s happening in the world of crypto directly affects the price, both for the good and the bad.
In the case of this past week, all three factors were in play: Facebook’s Libra announcement the week before no doubt helped to get people excited about cryptocurrency and perhaps spark the spree to buy Bitcoin. That news was then followed by general excitement, or hype, which helped keep the fire going. After all, as the Bitcoin price climbed higher and higher, reminding people of December 2017, it was hard not to want to get a piece of the action, in case those numbers touched 20,000 USD again, or higher, as was predicted. Of course, as the steep incline reminded people of Bitcoin’s peak, it dwindled supply and increased demand, driving the price up even more. But it also perhaps reminded people who missed the opportunity to sell at the peak that just having Bitcoin was not enough. While the mad dash to buy Bitcoin may have been in part due to FOMO (back to hype here), the sell-off that followed was probably due to the same, decreasing demand.
Coinmama resists the urge to make Bitcoin price predictions, but with such a big roller-coaster ride, it’s definitely interesting to see what others are predicting. An article from the week’s beginning touted predictions of 100,000 USD, while one towards the end of the week warned of the possible return of a bear market. Are they believable or just more hype? Only the future will tell.
Are Exchanges Safe?
This week wasn’t just about the Bitcoin price though. Among other top stories was the one of Dublin based exchange Bitsane’s possible exit scam. As Forbes reported, the crypto exchange seemed to vanish off the face of the earth, along with the funds of its 246,000 users. It’s not the first time exchange users have faced problems. Exchanges, which hold users’ funds in exchange-controlled wallets and allow their customers to trade through them, are notoriously susceptible to hacks, scams, and going under. In addition to the Bitsane story, which is still developing, here are a few more recent exchange nightmares:
In October, Canadian exchange MapleChange was either hacked or pulled an exit scam of its own, when it suddenly disappeared and then announced that it lost all of its customers’ funds.
Also in Canada, QuadrigaCX users discovered in January that their money was gone when the exchange CEO suddenly died, taking the private keys to the exchange’s funds with him to the grave. It’s still not clear where that money is, or how it can be accessed.
Even better-known exchanges such as Binance are susceptible to hacks, as is evident from the $40 million stolen from the exchange in May of this year (though in that case, users didn’t lose any funds).
Reading these stories, it’s impossible not to ask, are exchanges safe? Some of them are, of course. But at Coinmama we believe that giving users complete control over their own funds is not only the safest choice, it’s also the most in the spirit of the decentralization that’s behind cryptocurrency. Coinmama is not an exchange—rather, it provides users a fast and easy way to buy Bitcoin online with a credit card, debit card, or bank account. As such, users store their Bitcoin or other cryptocurrencies in the third-party wallet of their choice. What are the benefits of that?
Users can choose which wallet to store their crypto in, giving them control over the safety of their funds, and allowing them to store in cold wallets, hot wallets, or a combination of the two.
Coinmama doesn’t store user funds, which means that if we do get hacked, your money isn’t affected in any way.
Because your wallet isn’t held with Coinmama, only you have control over your private keys.
Coinmama isn’t going anywhere (we promise!), but even if operations did cease, it wouldn’t have any impact on your funds, because again they aren’t held with us. In other words, unlike when you purchase on an exchange, when you buy Bitcoin with Coinmama, there’s no risk of an exit scam or of a CEO’s unexpected death causing your funds to disappear.
While Bitsane’s disappearance is relatively small in the grand scheme of crypto, it highlights the risks of putting all of your faith (and dollars) in another operation. As more and more cases such as this one, as well as the hacks that plague the industry, come up, we expect to see changes in how Bitcoin is stored, how exchanges operate, and what people’s expectations of safety are. In the meantime, we at Coinmama are pleased to offer a service that keeps you in control of your own economy.