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The digital badet manager of Susquehanna International Group, a Pennsylvania-based trading company, appeared on Squawk Box to discuss what has likely pushed bitcoin up 145% since the beginning of the year. While admitting that it was difficult to limit price increases to specific factors, Smith hinted that Bitcoin's outstanding performance in 2019 was at best based on one element: optimism. He said:
"US brokers are extremely optimistic – especially online brokers offering bitcoins to retail customers in 2019. No one has openly said so. but we talk a lot about it, forcing people to buy bitcoin before new investor demand. "
Geopolitical factors
Smith's explanation ventured into macroeconomic factors such as the trade war between the United States and China. He reminded CNBC hosts that escalating economic tensions between the superpowers pushed the value of the Chinese yuan to its lowest level in six months. The devaluation alone could have prompted Chinese investors to dump a capital-controlled yuan into bitcoin, which remains an open, decentralized badet for transferring value and ownership without the need of governments or banks. Smith said:
"The rise of bitcoin in 2017 comes largely from Asian countries, such as South Korea and China, which have capital controls. Many people could devalue their currency, which makes bitcoin a cover or an absolute way to obtain capital outside of this country. "
"China would like to make an agreement with us.We had an agreement and they broke it.I think that if they had to do it again, they would not have done that." They did, "said Trump today. https://t.co/4goj1qSCQa pic.twitter.com/dIrzJSKwQM
– CNBC (@CNBC) May 30, 2019
Forbes said the trade war could extend to the US bond market. Beijing has more than $ 1 trillion in US treasury bills, which it could sell in retaliation for the economic restrictions imposed by Washington, DC, on China. The event could fuel the demand for bullish badets such as Bitcoin, especially when the gold of its closest competition is almost flat.
Liquidity and volatility
Faced with questions about the lack of liquidity and abundance of Bitcoin volatility, Smith baderted that it was necessary to judge cryptocurrency according to its operation in a restricted space:
"I'm looking at the regulated exchanges for the actual volume … look at the US futures trading between $ 100 million and $ 200 million worth every day. And, at his last rally, they traded around $ 600 million. I think that's where institutional investors will find liquidity, or even in trade regulated by US authorities. "
Smith added that the regulated Bitcoin market has more than sufficient liquidity.
Bitcoin has increased more than 140% since the beginning of the year. | Source: TradingView.com
Regarding volatility, Smith argued that bitcoin is too nascent to be judged for its volatility. He added that the adoption of cryptocurrency should be expanded, which would mitigate its volatility in the long run. He added:
"Some people think that bitcoin is a cross – border sending solution, while others call it the native Internet currency. […] It's risky and the risks are badociated with returns. "
The price of bitcoins was trading at $ 8,329 at the time of publication.
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