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A new Bitcoin frenzy has been unleashed with the Senate virtual currency hearing acting as a trigger
Another round of the epic November rise in Bitcoin prices is happening as we speak. Bitcoins are trading in a range between $700 on Bitstamp and $800 on the Mt Gox exchange. A top level of $900 was marked earlier. The significant difference in pricing on different exchanges is a curious aspect of this whole hot potato frenzy that is unfolding. It is particularly distorted when we have a look at prices on the Bitcoin exchange in Chinese Yuan (CNY).
The CNYBTC is quoted at 6553 Chinese Yuen per Bitcoin which would give us an exchange rate for the USD/CNY of about 9.5. Having in mind that the official exchange rate is 6.12 CNY per US dollar we can get an idea of Chinese savers’ appetite for an alternative to domestic assets. They are ready to take an almost 50% haircut on the exchange rate in order to get their hands on the alternative investment.
We could discuss the enormous arbitraging opportunities that arise from these discrepancies, however we’d rather focus on the latest batch of data that supported this move higher. Yesterday a Senate committee held its first hearing on the virtual currency’s prospects. Several participants expressed their views, with the main tone being that digital currencies are likely to provide benefits for the public, provided they are put in the context of a regulatory environment.
The disclosure of a surprising letter from the Federal Reserve Chairman Ben Bernanke dated September 6th has grasped a lot of attention. The views expressed by the FED are that while presenting a regulatory challenge at this juncture, virtual currencies may be holding long term promise and be a source of innovation by providing a more secure and efficient payment system.
Another hearing is scheduled for today – the Senate Banking Committee will be hearing from a senior Treasury department official and a banking regulator from the state of Massachusetts.
Should you be willing to speculate on Bitcoin’s wild moves, a couple of forex brokers like Plus500 and AvaTrade are already offering the digital currency for trading. Meanwhile it remains super volatile and is currently settling around 670 USD on the Bitstamp exchange. Stay tuned to LeapRate for more information on the subject.
To read a set of letters released to the media before the hearing visit the Wall Street Journal’s website.
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