From a low of $3072 after the double slap from the Chinese government banning ICO’s and Jamie Dimon’s calling bitcoin a fraud, bitcoin has been rising steadily since Friday afternoon, September 15. For almost a week bitcoin’s price was hovering between $4,300 and $4,400 but last night around 7 PM EST, the price starting climbing again. This morning bitcoin reached $4,500 and now sits at $4,560. That’s practically a 50% rise in price in 25 days. So, what’s going on?
Bitcoin commerce, that is, commercial payments for goods and services made with bitcoin, is still in its infancy. Most bitcoin transactions are probably made by speculators wishing to acquire bitcoin for its price appreciation potential rather than using it to purchase stuff. The price appreciation then is speculation, pure and simple.
The biggest driving force is Asia where bitcoin reached today’s U.S. $4,500 level in Korea in May. Japanese prices tend to be even higher. I haven’t heard from the Chinese yet but the fact that they are now going to issue cryptocurrency guidelines rather than outlaw it is very optimistic news. What happens from this point on is new territory.
Jamie Dimon criticized Bitcoin once again yesterday, telling CNBC cryptocurrencies were a “novelty” and said they are “worth nothing.” Soon after, a Swedish company filed a market abuse complaint saying that he knowingly spread false information to influence the marketplace. Jamie Dimon is not being ignorant about Bitcoin and cryptocurrencies; he knows all too well what Bitcoin will mean for his business. As head of JPMorgan Chase, Jamie Dimon oversees seven trillion dollars in trade daily. JP Morgan Chase provides security and ease-of-use for its customers doing that much business each and every day. Jamie Dimon recognizes that Bitcoin can do the same thing without cost. Of course he is concerned.
After his first Bitcoin bashing, the price fell from a high of $4325 to a low of $2976 in just a few days. His statement coupled with the Chinese government announced that they would put a stop to all new cryptocurrency IPO’s and end trading altogether in Bitcoin soon was a double whammy for the Bitcoin marketplace. Bitcoin soon recovered to a short-term high of $4036 and is now currently at $3756. There has been no appreciable change in price since Dimon’s second interview.
These are very interesting times for Bitcoin. Everyone wants to know where Bitcoin will wind up. Will it take off like a rocket on its way to $10,000 by years’ end and $100,000 by the end of 2018 as some are predicting? Will it crash and burn as Dimon suggests? Will the banking industry do what it can to slow the relentless progress and inevitability? The banks are not going to go down without a fight. You can bet on that. For the banks, all of the money they invested in getting support for credit card legislation, mortgage loan failures and protections, the bankruptcy laws, Glass-Steagall repeal, and the aftermath of the recession of 2009, means they know how to spend money to get things done in Congress. I would not be surprised if the Congress votes to shut down cryptocurrencies as did China. But it’s actually too late for that. Japan just voted to make cryptocurrency legal tender. Countries around the world are already using it. There have been rumors that Amazon will start accepting Bitcoin by end of October 2017. The good news is that we’re going to see how this all plays out in short order.