Markets Weekly is a weekly column analyzing price movements in the global digital currency markets, and the technology's use case as an asset class.
Bitcoin prices rose over the last week, pushing higher as the sentiment surrounding the digital currency strengthened.
Bitcoin was trading at $421.69 at 12:00am (UTC) on 19th February, compared to $377.82 on 12th February at 12:00am (UTC), according to the CoinDesk USD Bitcoin Price Index (BPI).
This increase represents a gain of more than 10%.
This week provided a contrast to the prior seven-day period between 4th February and 11th February, when the digital currency hovered in a range between roughly $390 and $370, additional BPI figures reveal.
The price of bitcoin increased on 12th February, rising from $377.82 at 12:00 am (UTC) to $383.10 at 23:00 (UTC), before continuing this upward climb the following day, reaching $392.34 at 23:00 (UTC). The digital currency suffered a loss on 14th February, but then continued to appreciate for the remainder of the week.
Market participants traded a total of 15.2 million bitcoins from 12th February to 19th February at 10:40 am (EST), according to data from Bitcoinity. China-based OKCoin was responsible for 47.45% of this transaction volume for the week, and 6.785 million bitcoins were traded through this bourse between 11th February and 17th February.
Huobi accounted for another 44.92% of total trading volume between 12th February and 19th February, and market participants transacted 7.412 million bitcoins through this exchange between from 11th February to 17th February.
Blockchain praise
Other developments coincided with the price appreciation that bitcoin enjoyed during the week, as it was announced that the central banks of both the eurozone and China are looking into blockchain technology.
More specifically, the European Central Bank revealed 17th February that it is delving into how this technology could either improve or hamper the infrastructure the region uses to settle securities and payments.
In addition, Zhou Xiaochuan, governor of the People’s Bank of China, stated in an interview with Caixin Weekly that the central bank is exploring blockchain, as well as other technologies, to establish and run an electronic cash network.
The Australian Securities Exchange (ASX) provided news of its own, announcing plans to use blockchain tech as part of a technology transformation program. As a result of this initiative, the bourse may develop a new method for settling equities trades.
While these developments may be uplifting, they will not solve bitcoin’s challenges, for example, its current capacity issue, which continues to add uncertainty to global markets.
Once the digital currency’s community overcomes this difficulty, sentiment could improve markedly, with Tim Enneking, the chairman of Crypto Currency Fund, a digital currency-focused hedge fund, predicting that bitcoin will enjoy a "major spike."
Sentiment improves
Bitcoin prices moved higher as the sentiment of global traders improved somewhat. In addition, markets enjoyed tailwinds as the adoption of both bitcoin and blockchain technology grew.
While bitcoin prices had responded strongly to the highly visible exit of bitcoin developer Mike Hearn, plunging roughly 15% on 15th January, the impact of this event began to fade this week.
Hearn, who was a developer of the digital currency for more than five years, declared that the bitcoin network had failed. Several major media outlets, including The New York Times, Fortune and The Guardian, all covered Hearn’s decision to move on.
Because the current bitcoin protocol limits these transactions, Hearn argued, the transaction network is currently highly unreliable at times.
Others see this as the natural growing pains of a new technology.
"Bitcoin is being challenged because it is a victim of its own success," Enneking said. "If transactions keep increasing at the current rate, bitcoin will have a hard time keeping up."
Enneking went on to predict that the bitcoin community will hold off on making decisions as long as it can, but that it "is better off reaching a decision that is suboptimal than not reaching a decision at all."
While there is still no solution to the transaction limit issue, bitcoin prices have seemingly recovered after hitting a local low of $358.77 in January.
Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.
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