Advertisement

Chart of the week: the bitcoin bubble is still hissing air

Last week bitcoin dropped by more than 20% in a few days to around $6,200 before recovering slightly. Other cryptocurrencies such as ethereum and XRP have lost their footing too.

913_COTW

Last week bitcoin dropped by more than 20% in a few days to around$6,200 before recovering slightly. Other cryptocurrencies such as ethereum and XRP have lost their footing too. Negative publicity appears partly responsible for the latest slide: there have been reports of a large sale of bitcoins relating to possible drug sales on the dark web.

Advertisement - Article continues below

Meanwhile, a report claiming that Goldman Sachs has abandoned plans to open a bitcoin trading desk won't have helped. The US Securities and Exchange Commission has rejected proposals for bitcoin ETFs owing to their lack of transparency. Finally, a strong dollar has reminded investors increasingly disenchanted withcryptocurrencies' volatility of the benefits of a robust reserve currency.

Viewpoint

"A shrewd observer of London's after-work drinking culture once [said]: There is no number between two and six.'After a third drink, another will seem like a good idea and another, and another[This applies] to Italy's bond market. As long as yields are two-point-something or lower, they are sustainable As yields rise above 3%, they may become unmoored The stability of public finances is in question. Yields might plausibly spike to 6% or more At least you are getting a higher yield in return for the risks. You are paid for your discomfort. That is not true of French bonds, which trade at only a small premium to Germany's. Think of the eurozone bond market as an after-work drinks party. Germany dislikes buying drinks for others, and so has gone home. Italy is on its third trip to thebar. France, which is nursing its first drink, insists that it is leaving soon. But if a fight breaks out, it will get drawn in."

Buttonwood, The Economist

Advertisement
Advertisement

Recommended

Bitcoin has just crashed hard – where will it go next?
Currencies

Bitcoin has just crashed hard – where will it go next?

The bitcoin price has taken a beating, down by 15% in one day. Dominic Frisby looks at what’s behind the crash, and where the cryptocurrency might go …
25 Sep 2019
Bitcoin has just “halved” again – what does that mean, and should you buy in?
Bitcoin

Bitcoin has just “halved” again – what does that mean, and should you buy in?

Cryptocurrency bitcoin has just hit a milestone, where the rate of new coins being produced halves. Dominic Frisby explains what that means.
13 May 2020
Is bitcoin going mainstream?
Bitcoin

Is bitcoin going mainstream?

The cryptocurrency suffers from all the problems it has always had and that may never change. But digital currencies more broadly may be about to take…
9 May 2020
Why now is the time to own gold – and bitcoin
Gold

Why now is the time to own gold – and bitcoin

The amount of money spent bailing out our financial system is incredible. Every government and central bank is at it. It’s times like these when you n…
8 Apr 2020

Most Popular

Eagle Lightweight GT: the reincarnation of the E-type Jag
Toys and gadgets

Eagle Lightweight GT: the reincarnation of the E-type Jag

Jaguar’s classic E-type sports car has been reinvented for the modern age. The result – the Eagle Lightweight GT – is a thing of beauty.
7 Aug 2020
Platinum: the precious metal that looks set to play catch-up with silver and gold
Silver and other precious metals

Platinum: the precious metal that looks set to play catch-up with silver and gold

Gold and silver continue to soar, but there's still time to get in. And there's another precious metal that looks set to go on a bull run too, says Jo…
7 Aug 2020
UK house prices hit a new record high – can it last?
House prices

UK house prices hit a new record high – can it last?

Despite the pandemic, UK house prices have hit a new high. John Stepek looks at what’s driving the surge in prices, and what it means for house prices…
7 Aug 2020