Monthly Archive: October 2018

Bitcoin: Can the crypto currency soon compete with the stock market?

Bitcoin’s volatility is falling steadily. While fluctuations of the Bitcoin exchange rate in the double-digit range were not uncommon a year ago, the crypto currency number one now seems to have levelled off somewhat. In the last 24 hours, the Bitcoin exchange rate has only dropped by 0.64 percent, in the course of the month by just under 3.3 percent – a sign of maturity? There is some evidence that we are dealing with a crypto currency that is slowly gaining maturity.

Bitcoin, originally set out to turn the banking system around, had (and still has) to struggle with some initial difficulties. First, there is the image of the dingy Internet currency, which exists only to facilitate terrorism and money laundering. A picture that is still persistent. In addition, there are constant doubts as to whether it is not a snowball system or the largest bubble the world has ever seen. This, combined with the high price volatility, has also been an argument that, for example, the US Securities and Exchange Commission has prevented Bitcoin ETF from being approved. However, as several researchers at the University of Krakow have now discovered, some things have changed in the country of crypto currencies.

Comparison of Bitcoin and the Bitcoin revolution

The scientists now compared the fluctuations in the Bitcoin exchange rate with those of the Bitcoin revolution and determined:

“[…] the Bitcoin revolution market and possibly other crypto currencies have concrete potential to soon become a regular market – as an alternative to the foreign exchange market. ”

They analysed the data for the period from 1 January 2012 to 31 March 2018 by filtering out trading data one minute apart. Among other things, they examined the relationship between trading volume and price fluctuation (volatility). Particularly in view of the last peak phase in December, they found that everything points to the Bitcoin market currently becoming more mature.

Bitcoin loophole: a normal phenomenon

Probably the most remarkable finding of the study: The Bitcoin loophole during the peak phase in December 2017 indicates that the Bitcoin loophole market is maturing.

Because:

“On December 16, 2017, the Bitcoin market experienced a spectacular turnaround. It changed from strongly growing to sharply declining […]. Such phenomena are well-known products from mature financial markets and occur unstoppably in [all markets] […]”.

It is above all the bubble phase that suggests that the market has now matured after the brief sharp rise and the bursting of the bubble:

“One of the simplest parameters for the temporal development of the price is [a correlation of two parameters] in the (growing) bubble phase […]. There is some empirical evidence that [this correlation] is common, perhaps universal, in financial markets”.

They ultimately come to the conclusion:

“The Bitcoin market has very quickly developed the statistical characteristics that characterize all “mature” markets, such as stocks, commodities or foreign exchange trading. It seems obvious that other crypto currencies follow this example. This could lead to a completely new market […]”.

Conclusion
In summary, the Bitcoin market has experienced in a very short time what long matured financial markets took much longer to achieve. And: bubble formation is normal and part of the ripening process. Bitcoin has thus reached a degree of maturity that, according to the researcher, will soon enable it to compete with traditional markets.

The next decision on a Bitcoin ETF is due in November – perhaps the SEC will take this study to heart.

HUSD: The stable coin solution of the Bitcoin stock exchange Huobi

The Bitcoin exchange Huobi is planning its own stable coin solution. Instead of releasing a new token like many others at present, however, the company is working on a solution to connect the existing coins with each other.

Bitcoin trading pair is still to come

Stable coins are a controversial issue in the Bitcoin ecosystem. Although they are theoretically very practical, they promise a one-to-one mapping of fiat currencies such as the US dollar. This allows one to switch directly between crypto and fiat when trading on the Bitcoin exchanges, without having to go through any bank accounts.

In practice, however, doubts repeatedly arise about the supposed stability of stable coins. As the Tether case has recently shown, there are still some problems with implementation. Even in the sheer mass of stable coins, you can sometimes ask yourself the question: Do we really need several stable coins? A stable currency should actually be enough.

Huobi launches new stable coin for stable coins with HUSD

Be that as it may, the Bitcoin exchange Huobi is now throwing its own stable coin onto the market, which in turn is to represent other stable coins: the HUSD. According to the official announcement, Huobi wants to release a stable coin, which represents a total of four stable coins. These are Paxos Standard (PAX), TrueUSD (TUSD), USD Coin (USDC) and Gemini Dollars (GUSD). If you transfer stable coins to your Huobi account in the future, the stable coin balance will be displayed directly in HUSD – a conversion and an exchange into one of the stable coins will be done directly by the exchange’s own token.

As you can see from the blog post, the Stable Coins PAX, TUSD, USDC and GUSD can be deposited on the stock exchange from 16 October. The trading pair USDT/HUSD for Tether will be available on the Bitcoin exchange from 22 October. The BTC/HUSD and ETH/HUSD trading pair will probably have to wait some time. Huobi first wants to evaluate the “market conditions”.