After spending a year and a half in the bear market, the price of Bitcoin has recently increased and the bull run is in full force. Although there are certain factors that may have a negative impact on the value of Bitcoin, it is likely that in the long term it will transform into a safe asset due to its rarity. However, the uncertainties of its future can make the price fluctuate daily.
Following a report that Gate.io’s research team launched looking at the fluctuation of the currency, Marie Tatibouet, CMO at Gate.io, teams up with Finance Monthly to take a look at a number of factors that can influence the price of Bitcoin.
User Adoption
One factor that can influence the price of Bitcoin is user adoption of the asset. Popularity of the currency can drive prices up, whereas if the demand for the currency is low, it can decrease the value. Individuals, governments, institutional investors and multinational corporations are adopting Bitcoin, therefore it is evident that the price will be pushed to a new high.
Findings from the report underlined that from 2012 and 2018, the number of Bitcoin addresses with 100 to 1000 BTC gradually increased, accounting for a considerable portion of the Bitcoin in circulation. Additionally, during 2012 and 2015, the price of Bitcoin fluctuated, with it becoming more affordable whist the mining difficulty decreased, and then increasing again. Between 2016 and 2017, Bitcoin became more expensive and the difficulty of mining increased, therefore the growth of Bitcoin slowed down considerably.
Bitcoin Reward Halving
In addition, Bitcoin reward halving is a contributor to the fluctuating price of the cryptocurrency. Bitcoin has a fixed amount of 21 million, unlike fiat money which can be inflated by the centralised authority. It is intended that when 210,000 blocks are generated, the reward from Bitcoin mining will half. Since this was introduced, it has happened twice where the reward has halved - resulting in a fall from 50 BTC to 12.5 BTC. On average this happens every four years.
As a result of Bitcoin reward halving, there is a significant impact on the mining industry. Following the first and second halving, the hash rate decreased, but recovered quickly. Throughout 2018, when the price of Bitcoin was falling, a number of miners decided to leave the practice as well as a few mining pools closing down. This highlights the effect the changing price of Bitcoin has on the industry. However, with this being said, there seems to be a wider acceptance of Bitcoin today. The hash rate began to stabilise at the beginning of 2019, suggesting an optimistic market.
Cryptocurrency Regulations
Cryptocurrency regulations is another factor that can affect the price of Bitcoin. As the cryptocurrency industry has experienced rapid acceleration, regulatory bodies have started to pay more attention to the industry. Governements are now taking note of money laundering, terrorism financing and other criminal activities that can be linked with cryptocurrencies. An example of this is in Canada where amendments to the ‘Proceeds of Crime and Terrorist Financing Act’ now require businesses dealing with virtual currencies to register with the Federal Financial Intelligence Unit.
The development of Bitcoin in most countries is unrestricted, with the report highlighting that among 126 countries, 67% of them consider Bitcoin as legal, whilst 19% of them remain neutral. On the other hand, only 8% the 126 countries deem Bitcoin illegal. The response from regulatory bodies can cause the value of Bitcoin to go up or down.
The Future
Although the future of individual cryptocurrencies are uncertain, the industry is growing as a whole. Predicting the price of individual cryptocurrencies is nearly impossible, but Bitcoin’s recent Strength Indicator shows clearly that Bitcoin is here to stay, at least for the next few years. With additional certainty, we should expect a price increase and stabilization. Bitcoin has created vast opportunities and possibilities and its full potential is yet to be reached. Bitcoin has come so far in the past 10 years, so it will be interesting to see where it will be in the next 10 years and the true value it will offer.
Creating a balanced and even workflow will optimise productivity for robots – in the same way as it will for human workers.
Surely robots don’t get tired, can work 24/7, are fully skilled at what they are programmed to do, and don’t have any pesky motivational issues – so their productivity must always be consistently high? Absolutely not. This is according to Neil Bentley, Non-Executive Director & Co-Founder of ActiveOps, a leading provider of digital operations management solutions.
To believe this would be to forget everything we have learned about Lean Workflow and the way production systems work. For a processor (robot or human) productivity is best measured as a ratio of output:input. How much work did we get out for the amount of time we put in? For this to make sense we generally convert time into “capacity to do work” based on some idea of how much work could be done in a given time.
So, if Person A completes 75 tasks in a day and they had capacity to complete 100 then their productivity was 75%. Similarly, if Robot B completes 500 tasks in a day and had capacity to do 1,000 then their productivity would be 50%.
As we begin to increase our investment in Robotic Process Automation (RPA) and AI: the productivity of this (potentially) cheaper processing resource will matter – if not so much now then certainly when everyone is employing RPA to do similar tasks within the same services.”
But why would Robot B only do 500 tasks? They wouldn’t dawdle because they didn’t like their boss. They wouldn’t spend hours on social media, and they would surely only be allocated tasks that they were 100% capable of processing.
Maybe Robot B could only process 500 tasks because there were only 500 available to be done. Maybe the core system was running incredibly slowly that day, or there was so much network traffic that latency was affecting cycle times. Maybe someone changed a port on a firewall and the robot needed to be reset. Or there were hundreds of exceptions and the robot had to try them multiple times before rejecting them.
It is strange (isn’t it?) that if a person’s productivity is 50% we assume idleness, a propensity to waste time on social media, or a lack of skill but if it is a robot we quickly understand that it is the workflow that is the problem,” he continued.
Data-focused technologies such as Process Forensics and some digital operations management technologies or WFO technologies that seek to improve performance by URL logging or other screen monitoring techniques are totally missing the point: people’s productivity is far more influenced by the flow of work through the system than it is by their willingness to work or their skill level.
Workforce monitoring technologies seek to intimidate people into working harder, but you can’t intimidate people into having more work available to do. Equally, fluctuating demand, bottlenecks in the workflow, variations in work complexity will all drive variations in productivity – as with people, so it is with robots,” he added.
The answer is to introduce digital operations management solutions in the back office that will be the result of a blended human/RPA strategy made up of:
- Some degree of “demand smoothing” – using service level agreements to allow for carrying some work from one period to the next to even out resource requirements
- Some degree of cross-team collaboration – moving work or people between teams to balance demand and capacity.
The plain fact of the matter is that with humans and robotics increasingly working alongside one another in service operations a blended and balanced approach needs to be taken on the issue of productivity.
Bitcoin, the cryptocurrency built on blockchain technology, is fast becoming a major player in the currency market. Since the beginning of 2017, the value of “XBT” has rocketed by over 150% and the simplistic reason for this would be that there is more demand than there is supply. Vinay Sharma, Senior Trader at ayondo markets tells Finance Monthly more about the current state of the bitcoin and its future prospects below.
Bitcoin uses encryption techniques to regulate the generation of its units and verify the transfer of its funds. It essentially allows people to cut out middlemen and thanks to its supposed security and independence from nations and central banks, its value, along with that of other cryptocurrencies, such as Ethereum and Ripple, has soared in recent months. In the Middle East, Africa, South America and Eastern Europe, for example, concerns over the volatile governments or consistent long-term currency inflation have contributed to Bitcoin's rising valuation.
When you look at Bitcoin’s rise in the last seven years, the mind boggles. An investor who had bought 1,000USD of the cryptocurrency in 2010, would now own around 45millionUSD worth[1]. The question many people are now asking is: is its value increasing due to mere speculation, or is it actually becoming a more widely accepted form of money? The currency is now available to many traders and investors to trade as a standard forex product. At ayondo, for example, we recently added Bitcoin to our product portfolio, meaning clients can now trade on its anticipated price movements without having to actually open up an e-wallet to purchase it on the internet.
While Trading Bitcoin does open it up to speculation, the cryptocurrency is also being accepted more widely as a medium of exchange, which after all, is the purpose of money in the first place. The number of businesses accepting Bitcoin is rapidly increasing, with the likes of Expedia, Etsy, Microsoft and Dell, to name a few, all accepting it as a form of payment, although it’s fair to say the UK is lagging behind in its Bitcoin acceptance.
So what’s next for Bitcoin? At the time of writing, its value is 2,735USD and one thing I am pretty confident of is that volatility lies ahead. Last week, for example, Morgan Stanley released a note saying that it doesn’t believe Bitcoin will be a viable currency in the future, and its value subsequently fell 20%. However, it has since recovered those losses, and whilst I largely agree with Morgan Stanley’s analysis, it certainly offers plenty of upside potential as a trading instrument, as demand in the short to medium term is more than likely to outstrip supply. Whether it will in fact become a viable medium of exchange in the future remains to be seen, but what’s undeniable, is that current interest is immense and its high variation in price offers an excellent trading opportunity.
[1] http://www.marketwatch.com/story/as-bitcoin-rockets-to-records-heres-how-much-skeptics-missed-out-on-says-one-money-manager-2017-05-22
At the current rate of fluctuation, with socio-political uncertainty reeking chaos in the markets, the pound’s performance leaves little to desire. Currency experts are now warning that further in 2017 we could see the pound hitting the same value as the euro.
According to the Sun, analysts have advised towards this possible plunge due to the general election, which resulted in a hung parliament, and the closing on the Brexit deadline.
Holidaymakers that are worried about the potential currency volatility ahead are being told to buy half their currency now and half closer to their break, as the pound could even break below the euro.
Finance Monthly has heard Your Thoughts on the possibility of a British value parity with the euro and included a few of your comments below.
Jonathan Watson, Chief Market Analyst, Foreign Currency Direct:
The prospect of the GBP/EUR exchange rate reaching parity or 1 GBP = 1 EUR has been raised many times over the course of recent events, before and after the Referendum vote. Throughout 2017 analysts have been split as to which direction rates will take, I believe there are two key features which explain why we are here and which will ultimately shape the likelihood of it being achieved.
Parity was almost reached in December 2008 when GBP/EUR hit 1.0227, since then the July 2015 high of 1.4345 had seemed to indicate such lower levels were confined to history. However, since 2016 and the result of the EU Referendum, politics has become the big driver on Sterling. Political concerns too have reached Europe and the failure of Le Pen and Gert Wilders to win any victory has seen the Euro strengthen. There is a German election in September and potentially an Italian vote too to be called in September, but, for now it seems the Euro has survived and this has helped it gain against the politically scarred Pound.
Economic data is the second factor and here too we see the Eurozone outshining the UK growing 0.5% in Q1 2017 against the 0.2% for the UK. Divergence in monetary policy is also key as the UK and the Bank of England could potentially raise interest rates to combat rising Inflation, threatening consumer spending and lowering GDP. Meanwhile the European Central Bank are looking to withdraw stimulus and maybe raise interest rates in the future, helping to further boost the positive sentiments towards the Euro.
Ultimately the prospect of parity is not going away and the outcome of the UK election is vital to determining how likely, as it effects who is on the UK side of negotiations with the EU and how strong their mandate is.
We are only 2 months into the Article 50 window and just coming up to the one year anniversary of the vote on the 23rd June. We have in the grand scheme of history just begun on this path and looking at what is ahead the prospect of parity for GBP/EUR this year remains a very real possibility.
Owain Walters, CEO, Frontierpay:
Ahead of the election, some analysts warned that the value of sterling will reach just £1 to €1. The political uncertainty following the election hasn’t eased the short-term risks to the Pound. However, I would argue that this result will, in the long term, be good news for sterling.
What I believe we will see next, as the Conservatives are forced to form a coalition with the DUP, is that Theresa May’s plan for a ‘hard Brexit’ will be diluted, if not taken off the table entirely. Since the vote to leave the European Union last year, the currency market has, on the whole, not responded well to the dialogue around a “Hard Brexit” and with the influence of a more liberal party in a new coalition government, the idea of a ‘softer’ Brexit will provide support to the Pound and we will see a period of strength.
The significant losses that the SNP has seen will also reduce the chances of a second Scottish independence referendum. While the notion of another Scottish referendum hasn’t done irreparable damage to the pound, taking it off the table at least for the foreseeable future will certainly give the Pound an extra boost.
Patrick Leahy, CFO, JML:
If the political events of the last two years have shown us anything, it is that situations that are improbable are certainly not impossible. Sterling/euro – or even sterling/dollar – parity is not out of the question. Whether you are an importer or exporter of goods or currency, CFOs across the country would rather the whole thing settled down and we had some certainty; but that’s unlikely. So what can you do?
Being in the FMCG market, JML’s short-term retail price is fixed, and it takes a good year to adjust prices. Just look at the large drop in sterling, post Brexit; it is only now that the inflation effect is really starting to trickle through to business and consumers. So, as a CFO with no concrete forecast on what will happen with the rates, you must try to minimise the impact any movement has on your pricing and margin strategy.
As a net importer, UK businesses and especially retailers are always susceptible to falls in rate, pushing up our costs, reducing margins, or lowering volumes. In some ways, the best strategy any business can have to manage exchange risks is to sell to other parts of the world – it’s a natural hedge. But, it is not that simple, because margins in each country are important and you can’t always point to your exchange gains when discussing gross profits with your invoice discount provider.
For retailers, the key is to not overstretch yourself if hedging on currency movement. Regularly and accurately forecasting your business performance is key to achieving this. It’s impossible to know exactly what your currency requirements are in 12 months’ time, but you know you will have some. You might win and lose on currency movements along the way but by slowly building your hedged positions you will have minimised the risks and helped the business achieve its margin along the way.
We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!
A few weeks back headlines were ripe with news that oil prices have been settling even lower, reaching a three-month low mid-March. Finance Monthly reached out to Jordan Hiscott, Chief Trader at ayondo markets, to give us a rundown of the current situation, and delves into the global economy’s dependence on the fluctuations of oil prices.
With West Texas Intermediate (WTI) Crude falling to $48, we’re now only $3 higher than the level at which OPEC agreed output would be cut. So how high did we get and does the current level pose value on a mean reversion perspective – i.e. if we agree with the theory that suggests prices eventually return to the mean or average over a two-year period? After the output cut was announced, oil prices rose as high at $54, the highest point in over a year, and until the beginning of March we sustained a clear range between $52 and $54. However, pressure on prices began to materialise around the 8th March, finally falling to $48 in disorderly fashion two days later. In my opinion, this fall is only the beginning of the downward price pressure of WTI, which is likely to be caused by three key catalysts.
Firstly, the lack of adherence to an output cut by OPEC members. The dominance of OPEC and the effect of its actions on international oil markets has waned drastically in recent years. And what was once an extremely united group with a clear objective has become more fragmented, with internal strife and economic difficulties causing individual nations to put their own interests before the group. Should these conditions become more prevalent, especially from a local economic perspective, I suspect it will create a domino effect - when one country breaches output levels, then others follow suit - and prices fall as a result.
Secondly, there is the impact of shale fracking. In a single generation, the US has become completely self-sufficient when it comes to oil and this is largely down to the rise of shale fracking. Remember as recently as 1980, after the Iranian Revolution, the US armed forces realised they had only 30 days’ worth of fuel to power all military vehicles. This led to creation of the Strategic Oil Reserve, located in the New Mexico caves, naturally pressurised, with enough fuel to power the American military for one year. With this dependence on oil from exports no longer significant, it’s certainly arguable that the US might not have engaged in various Middle Eastern conflicts had the supply of oil not been such an issue.
Lastly, and, in my view, most significantly, is the increasing importance of renewable energy. In a world that is drastically changing its dependence on fossil fuels, the advancement of technology to capture renewable energy is nothing short of remarkable. As international government adopts clean energy sources, it’s expected by 2025-2030 that we will reach ‘peak oil’, the hypothetical point in time when the global production of oil reaches its maximum rate, after which production will enter terminal decline.
Almost entirely due to technology, certain governments now achieve the majority of their energy needs from renewable sources. Albania, Iceland and Paraguay obtain essentially all of their electricity from renewable sources (Albania and Paraguay 100% from hydroelectricity, Iceland 72% hydro and 28% geothermal). Norway obtains nearly all of its electricity from renewable sources (97 percent from hydropower). In addition, petrol and diesel demand for vehicles is likely to fall in similar patterns. From a consumer perspective, the concept of electric power cars has never been more popular. For example, Tesla, the US electric car company, now has a market capitalisation that has almost eclipsed GM and Ford. The recent jump higher in stock price catapulted Tesla’s market cap to nearly $45 billion. That compares with nearly $48 billion for Ford and, farther off, about $53 billion for GM. Tesla’s technology means its S battery can now power a car for a range of 265 miles, and what is also remarkable is that Telsa also makes the world quickest production car, accelerating from 0-60mpn in 2.5 seconds. Currently 95% of all motor vehicles use fossil fuels: however the demand for electric cars is soaring having risen by 42% in 2016 alone. I can only see this trend continuing.
The culmination of these factors is abundantly clear to me: the dependence of the global economy on the fluctuations of the value of Oil will be over in 10-15 years.
