Bitcoin's Price Flirts With $750 as Zcash Fervor Fades
Category / Bitcoin
Published on 07.11.2016.
The hype surrounding Zcash faded in the week through 3rd November, with the new digital currency's prices suffering sharp declines early in the week.
On its 28th October launch, the ZEC/BTC currency pair reached roughly 3,300 BTC (more than $2m), but fell to below a value of 1 BTC by 30th October, Poloniex figures reveal.
The pair then mounted a recovery, rising to 3.58 BTC on 31st October, followed by another sharp drop to 1.29 BTC by 4th November.
Market analysts reported that this was the result of a decline in trader interest as supply for the new token, at first exceedingly rare, increased.
Petar Zivkovski, director of operations for Whaleclub, noted that Zcash now needs to "find its utility, grow a developer network and develop a support network" before it can be taken more seriously.
But while the digital currency’s supply is low for the time being, it is "increasing quickly", according to Arthur Hayes, co-founder and CEO of leveraged bitcoin trading platform BitMEX.
He went on to speculate as to how a new influx of ZEC will affect price going forward, telling CoinDesk he believes a bubble in the market is deflating.
"By year end, I expect the price of Zcash to be below 0.10 BTC," he said.
ZeroHedge, citing Bloomberg sources, reported that China's government is looking into potential capital controls for bitcoin. An article appearing on Bloomberg Terminal also provided similar reporting.
Zivkovski weighed in on how this development (combined with a handful of market factors) could drive a notable downward movement.
"This catalyst combined with smart money eager to cash in on the multi-month price rise and a highly leveraged long market ... caused the sharp declines we witnessed today and yesterday," he said.
While these variables provided a reasonable explanation for bitcoin’s price movements, more than one market observer expressed skepticism about the rumor that the Chinese government was looking into imposing capital controls on bitcoin.
"I don't think even China could successfully implement capital controls on bitcoin," said bitcoin hedge fund operator Jacob Eliosoff. "It would be like banning sending prime numbers."
He added that: "What they could do much more easily is shut down the Chinese exchanges."
Hayes told CoinDesk that he doesn’t place "any truth" in the rumor involving the Chinese government placing restrictions on the trading and ownership of bitcoin. He further voiced his doubts about such a policy change, as any such move "would be made very clearly through official channels."
Beyond that, he asserted that the size of bitcoin’s market cap means that the digital currency is "not a relevant channel for money escaping China."
After moving lower in the first half of the week, prices for tokens on the alternative ethereum blockchain, ethereum classic (ETC) remained calm, even though market observers voiced concerns about the technology's long-term viability.
More than one expert has expressed concerns that ethereum classic, which came into existence when the original ethereum blockchain experienced a hard fork, might have a hard time remaining viable in the long-term.
Zivkovski asserted that ethereum classic lacks both a support network and a "thriving" developer community, though there are signs the group is becoming better organized.
Eliosoff took a different view, emphasizing that digital currencies need potential users, and he sees "zero evidence of a user base eager for ETC."
However, Hayes provided a more optimistic assessment of the blockchain and its potential, stating that there are "very many committed" people and organizations involved with the digital currency, especially in China.
As a result, he offered a bullish prediction for the currency. "I think ETC is due for a pop in price," he told CoinDesk. "It will happen when the majority of people believe it has died."
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