Xinhua News: Will Hyperbitcoinization Lead To Crisis?
Upon launch of the world’s first bitcoin futures by CBOE, a report on Xinhua News questioned whether the hyperbitcoinization will lead to more profound crisis. Market analyst also said that due to nature of futures trading, if bitcoin bubble burst, only speculators would get burnt but the financial market would not be affected.
Bitcoin is the highest return in terms of investment in the world in 2017. Earlier this year, the price of a bitcoin was less than $ 1,000, now it worth more than $ 16,000, a 16 fold return in less than a year.
The report reviewed the origin of bitcoin price: the pizza story and the “hyperbitcoinization” is of pure speculative nature.
Market analysts believe that the bitcoin investment boom is driven by internal and external factors. Speculator invest in bitcoin because Bitcoin as an cryptocurrency has an immeasurable prospect, which is its intrinsic value. External factors are:
- USA’s loose monetary policy
- Abundant market liquidity
- A constantly improving economic outlook
- Declined risk aversion
All of these elements fueled the bitcoin mania and promoted speculative sentiments in the market.
The launch of CBOE bitcoin futures and the upcoming CME bitcoin futures marks the milestone that Bitcoin is finally adopted by mainstream financial institutions.
The report also points out that large financial institutions are not directly involved in bitcoin transactions at the moment and there are few financial products are backed by bitcoin. Therefore, while many speculators may get burnt if bitcoin bubble burst, it is unlikely to affect the stability of the entire financial market.
However, at the end of report indicates that the reporter of Xinhua is still lacking some basic understanding of bitcoin payment:
“Some observers pointed out that if bitcoin bubble burst, the biggest loser may be bitcoin itself. Because the volatility will destroy bitcoin as a means of transaction: when the price goes up, the buyer is not willing to pay in bitcoin; and when the price goes down, the seller is reluctant to accept bitcoin.”
He obviously doesn’t know that bitcoin payment via bitpay is settled in realtime.
Bitcoin futures is also the headlines of other major financial media like CCTV.
“The bubble could burst any time.”