Stock Losses Deepen in Asia With Oil Below $40; Won, Kiwi Weaken

Asia stocks extended their drop as oils selloff revived concerns over global growth and after Japans fiscal stimulus package fell short of what some investors had expected. High-yielding currencies retreated.

Japans Topix index slipped for a third day after the yen, which typically moves at odds with local shares, jumped 1.5 percent last session. Crude halted losses below $40 a barrel before an update on U.S. oil inventories, while gold was near its highest price since July 11. The Korean won weakened with the Malaysian ringgit as New Zealands currency also slipped.

A four-week advance in global equities has faltered as crude descended into a bear market. With investors looking to central banks and governments around the world to shore up growth, Japans announcement Tuesday that it would boost spending by 4.6 trillion yen ($45 billion) in the current fiscal year failed to ignite optimism that Prime Minister Shinzo Abe can revive the worlds third-biggest economy. The Bank of England is projected to cut rates Thursday.

After all the build-up, its a disappointment, Shane Oliver, a global investment strategist at AMP Capital Investors Ltd. in Sydney, which manages more than $110 billion, said by phone, referring to Japans fiscal stimulus announcement. This will be negative for Asian stocks Wednesday, reflecting the negative response weve already seen in the U.S. and Europe overnight, he said.

A slew of services purchasing managers indexes are due Wednesday, with figures from China showing a slower pace of expansion in July than in June. Thailand is projected to hold benchmark rates in a policy review.


The MSCI Asia Pacific Index sank 1.2 percent as of 10:50 a.m. Tokyo time, set for its lowest close in almost a week, as all 10 industry groups declined.

Australias S&P/ASX 200 Index slipped 0.8 percent amid losses in banks. The Kospi index in Seoul slid 1 percent. Hong Kongs Hang Seng Index sank 1.6 percent as trading resumed after the market was shut on Tuesday because of a storm. The Topix lost 1.4 percent, and is down more than 3 percent this week.

A risk-off mood is coming to the forefront, said Chihiro Ohta, a senior strategist at SMBC Nikko Securities Inc. in Tokyo. In Japan, where many companies, especially in the auto sector, are easily affected by currency moves, the strength in the yen weighs on the overall profits for listed firms.

E-mini futures on the S&P 500 retreated 0.1 percent to 2,151.25 after the underlying index slipped 0.6 percent Tuesday, led lower by retailers and industrial stocks. The S&P 500 Index notched its first back-to-back declines since the aftermath of the U.K.s decision to quit the European Union.


The yen weakened 0.3 percent to 101.24 per dollar, after touching 100.68 on Tuesday, its strongest level since July 11.

The governments plan incorporates 13.5 trillion yen of fiscal measures — including 7.5 trillion yen in new spending starting this year, and 6 trillion yen in low-cost loans.

For more on Japans fiscal stimulus boost, click here.

The Bloomberg Dollar Spot Index, a gauge of the U.S. currency against 10 major peers, added 0.1 percent, after sliding 0.6 percent in the previous session amid waning bets on the Federal Reserve raising interest rates in 2016.

The kiwi retreated 0.6 percent to 72 U.S. cents after jumping 1 percent last session, while the ringgit and the won were down at least 0.4 percent.

Bitcoin tumbled after one of the largest exchanges halted trading because hackers stole about $65 million of the digital currency. Bitcoin slumped 4.2 percent against the dollar, bringing its three-day drop to 18 percent.


Australian notes due in a decade yielded 1.92 percent, up 10 basis points after they slid to an all-time low on Tuesday. The Reserve Bank of Australia delivered its second quarter-point cut for 2016 on Tuesday, taking the cash rate to a record-low 1.5 percent, as expected by a majority of economists and investors.

Yields on 10-year New Zealand debt added three basis points to 2.2 percent, while rates on similar maturity Treasuries held at 1.56 percent, following a two-day advance of about 10 basis points.

Bill Gross, the former chief investment officer of Pacific Investment Management Co., reiterated his warning on government debt Tuesday after yields touched all-time lows in the past month. The danger of the unprecedented rally, as Gross sees it, is that any reversal will be painful for investors.


West Texas Intermediate crude added 0.8 percent to $39.81 a barrel, after falling 5 percent over the past two sessions.

The decline is not totally unexpected, but the speed and severity of the fall has been a surprise, said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney. Disruptions tightened the market during the second quarter and the sustainability of those was always going to be relatively short lived. There are still relatively high inventories but the market is approaching a balance.

U.S. oil inventories dropped by 1.34 million barrels and gasoline stockpiles fell, the American Petroleum Institute was said to have reported. Government data out Wednesday is forecast to show crude and motor fuel supplies decreased.

Gold for immediate delivery was little changed at $1,364.78 an ounce.

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What Could Kill the Bitcoin Boom

If you bought a Bitcoin in early 2017, when one cost less than $900, you could have a profit of more than 1,200 percent now. But you almost certainly didn’t do that. Perhaps you dipped in a toe in November or December, as the price hit headline-grabbing records—$10,000, then $15,000, then higher. If you were very unlucky and bought at the peak of about $20,000 on Dec. 17, you’d have lost more than 40 percent of your money as of Jan. 16, when the price was $11,200. More than $2,000 of that decline came in about 24 hours, after South Korean Finance Minister Kim Dong-yeon indicated the country may crack down on cryptocurrency trading to discourage speculation. It’s not every asset that can feel like it’s in a bubble and a crash at the same time.

But based on no other valuation metric than what it cost a year ago, the price of Bitcoin is still dizzyingly high. For the many doubters who can’t believe things have come this far—and for Bitcoin owners who can see how much they might lose—the big question is what it would take to knock the price back further.

In past episodes, “Bitcoin and digital currencies have been incredibly resilient to bad news,” says Meltem Demirors, director of development at Digital Currency Group, which invests in Bitcoin and related technologies. Cryptocurrency exchanges such as Mt. Gox, Bitfinex, and BTC-e have been hacked over the years, with hundreds of millions of dollars’ worth of Bitcoin stolen. China in September moved to shut down exchange trading of the cryptocurrency. None of these permanently stopped Bitcoin’s rise up the price charts, especially after it drew the attention of hedge fund traders and futures markets.

One doomsday scenario would be a successful hack of the blockchain. That’s the underlying technology that records and verifies every transaction, using exact copies of a database spread on computers all over the world. Those host computers, called miners, are rewarded with new Bitcoin for doing the work of verifying transactions. An attacker might be able to alter the blockchain’s history by marshaling more than half the computing power on the network. But that would be monumentally difficult; someone with the technology to do it could instead “opt into the game” and get paid to mine Bitcoin, says Tyler Winklevoss, co-founder of the Gemini digital asset exchange and one of the largest Bitcoin holders.

The likelier risks are far more pedestrian. The first is that while plenty of investors and speculators have piled into Bitcoin, it’s a difficult currency to use in the real world. The network is slow and expensive for small transactions. And who wants to spend $4 in Bitcoin for a coffee if next week that could be worth $8? “My big concern as a company is that digital currency doesn’t find its quote-unquote killer use cases, where people are saying, ‘Wow, we now have tens of millions of daily active users that are using it for payments,’ ” says Adam White, who runs GDAX, the exchange for institutional investors run by Coinbase. “That’s one of the largest existential threats to the company.”

BitPay's Singh Calls Bitcoin Selloff an Overreaction

There’s been a very public civil war among Bitcoin developers: One group favors changes to the network, the other doesn’t. “It’s got to have the developer community come together and figure out how to scale it properly and continuously,” says Sheri Kaiserman, a managing director at Wedbush Securities and an early Wall Street believer in Bitcoin’s potential. Meanwhile, Bitcoin faces competition from other digital currencies, from Bitcoin Cash to Litecoin to Ether, which have also seen big gains and wild swings.

You could spend weeks learning about the nuances of the various cryptocurrencies. But the main risk to Bitcoin is actually the easiest to understand. “The biggest factor in what’s driving the price up is potentially what will drive it down—a reversal of animal spirits,” says Adam Ludwin, chief executive officer of blockchain startup Chain. “There is essentially a belief this will continue to go up. If people believe it will continue to go down, that’s self-reinforcing.”

To explain that psychology, Ludwin invokes John Maynard Keynes. The economist likened investing to a newspaper contest where readers were asked to pick the picture of the person the majority of other people would find most attractive. To win, a reader would have to discard his own judgment and bet purely on a guess of what the average person would find beautiful. Or, maddeningly, even on what the other players would think the average player would like. Cryptocurrency in general is “really one of the most beautiful distillations of the Keynesian beauty contest that’s ever existed,” says Ludwin. All investments have some of this speculative element, but unlike, say, a stock, Bitcoin isn’t a claim on future earnings to which investors can hitch a valuation. To bet on Bitcoin is to believe simply that others will want it.

One read on the psychology of the Bitcoin boom is that it’s part of a broad bull market in all kinds of assets. Despite anxieties about politics, North Korea, and rising equity valuations, investors seem to be in a mood to embrace risk and are fearful of missing out on big gains. Or perhaps Bitcoin is the shadow side of that optimism: Many are drawn to cryptocurrency because they see it as a palliative to the system that came crashing down in 2008, and their belief in Bitcoin has been hard to shake. Market psychology is difficult to pin down—the one thing that’s reliable about it is its volatility.

    BOTTOM LINE – Despite its meteoric rise in the past few years, Bitcoin remains a wildly volatile investment, dropping more than $2,000 in a day when bad news hits.

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    Heres What the World’s Central Banks Really Think About Bitcoin

    Eight years since the birth of bitcoin, central banks around the world are increasingly recognizing the potential upsides and downsides of digital currencies.

    The guardians of the global economy have two sets of issues to address. First is what to do, if anything, about emergence and growth of the private cryptocurrencies that are grabbing more and more attention — with bitcoin now surging toward $10,000. The second question is whether to issue official versions.

    Following is an overview of how the world’s largest central banks (and some smaller ones) are approaching the subject:

    U.S.: Privacy Worry

    The Federal Reserve’s investigation into cryptocurrencies is in its early days, and it hasn’t been overtly enthusiastic about the idea of a central-bank issued answer to bitcoin. Jerome Powell, a board member and the chairman nominee, said earlier this year that technical issues remain with the technology and "governance and risk management will be critical." Powell said there are "meaningful" challenges to a central bank cryptocurrency, that privacy issues could be a problem, and private-sector alternatives may do the job.

    Euro Area: Tulip-Like

    The European Central Bank has repeatedly warned about the dangers of investing in digital currencies. Vice President Vitor Constancio said in September that bitcoin isn’t a currency, but a “tulip” — alluding to the 17th-century bubble in the Netherlands. Colleague Benoit Coeure has warned bitcoin’s unstable value and links to tax evasion and crime create major risks. President Mario Draghi said this month the impact of digital currencies on the euro-area economy was limited and they posed no threat to central banks’ monopoly on money. 

    China: Conditions ‘Ripe’

    China has made it clear: the central bank has full control over cryptocurrencies. With a research team set up in 2014 to develop digital fiat money, the People’s Bank of China believes "conditions are ripe" for it to embrace the technology. But it has cracked down on private digital issuers, banning exchange trading of bitcoin and others. While there’s no formal start date for introducing digital currencies, authorities say going digital could help improve payment efficiency and allow more accurate control of currencies.

    Japan: Study Mode

    Bank of Japan Governor Haruhiko Kuroda said in an October speech that the BOJ has no imminent plan to issue digital currencies, though it’s important to deepen knowledge about them. “Issuing CBDC (central bank digital currency) to the general public is as if a central bank extends the access to its accounts to anyone,” Kuroda said. “As such, discussion about CBDC revisits fundamental issues of central banking.”

    Germany: ‘Speculative Plaything’

    In a country where lot of citizens still prefer to pay in cash, the Bundesbank has been particularly wary of the emergence of bitcoin and other virtual currencies. Board member Carl-Ludwig Thiele said in September bitcoin was “more of a speculative plaything than a form of payment.” A shift of deposits into blockchain would disrupt banks’ business models and could upend monetary policy, Thiele said. At the same time, the Bundesbank has been actively studying the application of the technology in payment systems.

    U.K.: Potential ‘Revolution’

    Bank of England Governor Mark Carney has cited cryptocurrencies as part of a potential “revolution” in finance. The central bank started a financial technology accelerator last year, a Silicon Valley practice to incubate young companies. Carney says technology based on blockchain, the distributed accounting database, shows “great promise” in enabling central banks to strengthen their defenses against cyber attack and overhaul the way payments are made between institutions and consumers. He has nevertheless cautioned the BOE is still a long way from from creating a digital version of sterling.

    France: ‘Great Caution’

    Bank of France Governor Francois Villeroy de Galhau said in June that French officials "advise great caution with respect to bitcoin because there is no public institution behind it to provide confidence. In history all examples of private currencies ended badly. Bitcoin even has a dark side — there were this data attacks." He said "those who use Bitcoin today do so at their own risk."

    India: Not Allowed

    India’s central bank is opposed to cryptocurrencies given that they can be a channel for money laundering and terrorist financing. Nevertheless, the Reserve Bank of India has a group studying whether digital currencies backed by global central banks can be used as legal tender. Currently, the use of cryptocurrencies is a violation of foreign-exchange rules.

    Brazil: Support Innovation

    The Banco Central do Brasil sees “no immediate risk for the Brazilian financial system" but remains alert to the developments of the usage of those currencies, it said in a statement this month. The bank pledged “to support financial innovation, including new technologies that make the financial system safer and more efficient.”

    Canada: Asset-Like

    The Bank of Canada’s senior deputy governor, Carolyn Wilkins, who is leading research on cryptocurrencies, said in an interview this month that cryptocurrencies aren’t true forms of money. “This is really an asset, or a security, and so it should be treated that way,” Wilkins said. As others, she viewed distributed ledger technology as promising for making the financial system more efficient.

    South Korea: Crime Watch

    The Bank of Korea’s focus has been protecting consumers and preventing cryptocurrencies from being used as a tool of crime. Deputy Governor Shin Ho-soon said this month that more research and monitoring was needed.

    Russia: ‘Pyramid Schemes’

    Russia’s central bank has expressed concerns about potential risks from digital currencies, with Governor Elvira Nabiullina saying “we don’t legalize pyramid schemes” and “we are totally opposed to private money, no matter if it is in physical or virtual form.” For the moment, the Bank of Russia prefers to delay a decision on regulating the financial instruments unless President Vladimir Putin pushes for action sooner. The central bank will work with prosecutors to block websites that allow retail investors access to bitcoin exchanges, according to Sergey Shvetsov, a deputy governor.

    Australia: Monitoring Closely

    The Reserve Bank is closely monitoring the rise of digital currencies and recognizes the technology underpinning bitcoin has the "potential for widespread use in the financial sector and many other parts of the economy," head of payments policy Tony Richards said last month.

    Turkey: Important Element

    Digital currencies may contribute to financial stability if designed well, Turkish Central Bank Governor Murat Cetinkaya said in Istanbul earlier this month. Digital currencies pose new risks to central banks, including their control of money supply and price stability, and the transmission of monetary policy, Cetinkaya said. Even so, the Turkish central banker said that digital currencies may be an important element for a cashless economy, and the technologies used can help speed up and make payment systems more efficient.

    Netherlands: Most Daring

    The Dutch have been among the most daring when it comes to experimenting with digital currencies. Two years ago the central bank created its own cryptocurrency called DNBcoin — for internal circulation only — to better understand how it works. Presenting the results last year, Ron Berndsen, who was in charge of the project, said blockchain may be “naturally applicable” in the settlement of complex financial transactions.

    Scandinavia: Exploring Options

    Like the Dutch, some Nordic authorities have been at the forefront of exploring the idea of digital cash. Sweden’s Riksbank, the world’s oldest central bank, is probing options including a digital register-based e-krona, with balances in central-database accounts or with values stored in an app or on a card. The bank says the introduction of an e-krona poses "no major obstacles" to monetary policy.

    In an environment of decreasing use of cash, Norway’s Norges Bank is looking at  possibilities such as individual accounts at the central bank or plastic cards or an app to use for payments, it said in a May report. Denmark has backtracked somewhat from initial enthusiasm, with Deputy Governor Per Callesen last month cautioning against central banks offering digital currencies directly to consumers. One argument is that such direct access to central bank liquidity could contribute to runs on commercial banks in times of crisis.

    New Zealand: Considering Future

    The Reserve Bank of New Zealand, once a pioneer on the global stage with its early introduction of an inflation target, said Wednesday it’s considering its future plans for currency issuance, and how digital units may fit into those strategies. “Work is currently underway to assess the future demand for New Zealand fiat currency and to consider whether it would be feasible for the reserve bank to replace the physical currency that currently circulates with a digital alternative,” the RBNZ said in what it termed an analytical note.

    Morocco: Violating Law

    Representing one of the more stringent reactions, the country has deemed that all transactions involving virtual currencies as violating exchange regulations and punishable by law. Cryptocurrencies amount to a hidden payment system, not backed by any institution and involving significant risks for their users, authorities said in a statement this month.

    Bank for International Settlements: Can’t Ignore

    The central bank for central banks has said that policy makers can’t ignore the growth of cryptocurrencies and will likely have to consider whether it makes sense for them to issue their own digital currencies at some point. “Bitcoin has gone from being an obscure curiosity to a household name,” the BIS said in September. One option is a currency available to the public, with only the central bank able to issue units that would be directly convertible to cash and reserves. There might be a greater risk of bank runs, however, and commercial lenders might face a shortage of deposits. Privacy could also be a concern.

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      After 4,400% Surge, Bitcoins Fate Hinges on Huge Chinese Miners

      Wu Jihan still remembers the exhilaration he felt after learning about bitcoin in 2011.

      QuickTake Bitcoin and the Blockchain

      A self-described computer geek fresh out of Chinas top university, Wu soaked up everything he could about the digital currencys mysterious founder and its users ambitions to transform the global financial system. Within a year, he quit his job at a private equity firm to launch a bitcoin startup. Today, his company is one of the worlds biggest players in bitcoin mining, a computing process that makes transactions with the cryptocurrency possible.

      Wu Jihan
      Source: Bitmain Tech Ltd.

      Yet for Wu, and the rest of bitcoins online community, feelings of exhilaration have been replaced by apprehension over what could be the biggest hurdle to the cryptocurrencys growth since its emergence in 2009. Because of a pre-programmed cap on the amount of data bitcoins network is allowed to process, the current system for verifying payments needs to boost its capacity, or transaction times will balloon and undermine bitcoins 4,475 percent advance over the past five years.

      In theory, theres a simple fix: With some coding tweaks, transactions could continue apace. But the problem is that any change to bitcoins architecture will inevitably create losers, and the motley crew of miners, software developers, libertarians and entrepreneurs who comprise the bitcoin universe have yet to form a consensus. After at least five attempts in the past year, enthusiasts will try once again at a conference in Silicon Valley this month. Any solution will almost certainly need the support of attendees from China, now home to 70 percent of the worlds bitcoin mining power and 90 percent of trades.

      “This truly is one of the biggest tests to global collaboration,” said Wu, who runs AntPool, the worlds second-largest mining collective, and is also one of the largest manufacturers of mining hardware. “Theres a lot of money and emotions involved, and people have very different ideas on what they want bitcoin to be.”

      For a QuickTake explainer on bitcoin, click here.

      It could be the opinions of Wu and his compatriots that matter most. Chinese miners have leveraged their access to cheap labor, inexpensive electricity and local chipmaking factories to outmaneuver their global peers in performing the complex calculations needed to verify bitcoin transactions — a service for which theyre compensated in newly-minted bitcoin. When the cryptocurrencys price tumbled from about $1,000 in late 2013 to below $200 in early 2015, lower costs in China allowed them to stay afloat even as many Western operators folded.

      Bitcoins volatility, meanwhile, has attracted Chinas horde of speculative individual investors, who are keener than ever to diversify out of yuan-denominated assets after a shock devaluation in the nations currency last year.

      Mining Power

      The concentration of bitcoin activity in China has some worried that the system could become vulnerable to meddling by the ruling Communist Party, which restricts cross-border capital flows and has tight control over the Internet. Its of particular concern to libertarians who value the cryptocurrencys decentralized nature above all else. Unlike most major units of exchange, bitcoin has no single authority, such as a central bank, with control over the money supply. The maximum number of bitcoins is capped at 21 million.

      Having so much mining power in China is a very negative thing, Peter Todd, an active bitcoin code contributor based in Toronto, wrote in an e-mail interview. Itd be all too easy for the Chinese government to do a lot of harm.

      While Chinas central bank has said bitcoin isnt a real currency and has taken steps to prevent it from becoming entrenched in the domestic financial system, theres little evidence that policy makers are trying to gain control over its global development.

      Instead, the influence lies with privately-run Chinese miners. Because the current system is dominated by the software miners use most, any proposal to update bitcoins architecture will need their validation.

      Block Sizes

      The miners control the real voting power, said Wang Chun, co-owner and chief administrator of F2Pool, the worlds largest mining collective.

      The debate over how to resolve the digital currencys capacity problem is split primarily into two camps. One group, known as Bitcoin Classic, says the size of digital blocks that contain bitcoin transactions should be increased as soon as possible to ensure that processing times dont jump.

      The other, Bitcoin Core, argues that its too soon to make major changes because it will take time to ensure that the new software is secure. Theyre also worried that a major boost to block sizes will give too much power to the handful of miners with the processing capacity to handle the lengthy calculations associated with larger blocks.

      Core supporters have been primarily focused on introducing features to increase transaction efficiency, while some have agreed to a capped increase in block sizes. They place a priority on widespread adoption before big changes are made, fearing a split in the bitcoin community that could send prices tumbling. The cryptocurrency has gained about 56 percent this year and traded at $676.22 on Wednesday.

      Waiting Game

      Major Chinese miners and a group of Core developers agreed on a proposed fix at a meeting in Hong Kong in February. The new code is due to become available this month, and could be activated by July 2017 if it gains broad support.

      HaoBTCs mining data center in Sichuan, China.
      Source: HaoBTC

      “If the consensus is implemented successfully, it will set an example for future collaborations between all parties,” said Wu Gang, chief executive officer of HaoBTC, which accounts for about five percent of the computing power used to verify bitcoin transactions.

      If no agreement is reached, processing times could potentially climb to hours or even days, making the digital currency inconvenient for many users who can get almost instant confirmations on payments through their credit-card providers or online money-transfer services like PayPal. In its current iteration, the bitcoin network can handle about seven transactions per second. Visa Inc., the worlds largest payment processor, is capable of more than 24,000 per second.

      A surge in processing times would give credence to the views of bitcoin skeptics including JPMorgan Chase & Co. CEO Jamie Dimon, who says a digital currency without any central authority has no chance of survival in the $5.3 trillion-a-day foreign exchange market. Even after its surge over the past five years, the total market value of outstanding bitcoin is less than $11 billion, with a network that handles about $120 million of transactions daily.

      Despite the challenges, AntPools Wu is optimistic. Hes planning to attend the meeting of bitcoin enthusiasts in California this month and says miners from China are set to play a bigger role in driving the global community toward consensus.

      “Theres no way we will be at this impasse forever,” Wu said. “You have got to believe that with so many smart people in the industry, they will make the right decisions.”

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      Bitcoin Looks Remarkably Like A Bubble, New Zealand’s Central Banker Warns

      Bitcoin’s spectacular gains look like a speculative bubble and the cryptocurrency is too unstable to be useful in the future, New Zealand’s central banker said.

      “It looks remarkably like a bubble forming to me,” Reserve Bank of New Zealand Acting Governor Grant Spencer said in interview with TVNZ broadcast on Sunday. “Over the centuries we’ve seen bubbles, and this appears to be a bit of a classic case. With a bubble, you never know how far it’s going to go before it comes down.”

      Bitcoin has soared more than 1,500 percent this year, and about 85 percent in just the past two weeks, as people rush to buy the digital currency in the hope it will become a legitimate alternative to gold or traditional money. Trading in bitcoin futures opens later Sunday, with the first major U.S. exchange offering a product pegged to the wildly fluctuating unit of payment that has no backing from a government or a central bank.

      Bitcoin, “mined” by computers performing complex calculations, surged to over $16,000 last week, and all bitcoins in circulation are now worth more than New Zealand’s entire $185 billion economy. Early investors include the Winklevoss twins, who played an early role in Facebook Inc.’s formation. Cameron Winklevoss told Bloomberg Friday he think bitcoin’s gains have only just begun as it will come to be seen as an upgrade to gold. 

      ‘Very Volatile’

      “Bitcoin is to me very much like gold,” Spencer said. “It’s mined, it has a fixed quality and the price is very volatile.”

      The RBNZ is doing research on demand for New Zealand’s dollar, known as the kiwi, and whether it would be feasible to at some stage replace it with a digital alternative, but Spencer said bitcoin isn’t a template for the future.

      “I think digital currencies, cryptocurrencies, are a real and serious proposition for the future. I think they are part of the future, but not the sort that we see in bitcoin,” he said. “I think a cryptocurrency that has a more stable value will be the sort of cryptocurrency that’s more useful for the future.”

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        Circle removes ability to buy and sell Bitcoin as it doubles down on mobile payments

        Launched in 2013, Circle is a consumer finance company originally built with the goal of using the Bitcoin blockchain as a payments platform. Part of that was achieved by offering customers the abilityto buy and sell Bitcoin on the platform. Since then, the company has raised over $70M and slowly but surely turned in the direction of social payments.

        Buttoday the company is fully cutting support for buying and selling Bitcoin via their platform. Instead, they intent to double down on mobile payments.

        Today Circle will launch full messaging features which essentially turns it into an app that looks just like WhatsApp or Messenger just with the ability to send money within conversations.

        But Circle isnt totally giving up on Bitcoin. While you wont be able to send Bitcoin between friends (transactions will be denominated in currencies like Euro and USD) the company says they will still be using Bitcoin as a settlement token on the backend.

        To do thisCircle is launching a protocol called Spark, which lets digital wallets exchange value using blockchains.It seems that the company is hedging its bets on Bitcoin by building protocols that could still exist in case Bitcoins popularity decreases to the point where using its Blockchain becomes unsustainable.

        Circle is also announcing a partnership with Coinbase essentially they arejust directing all of their current customers to Coinbase who want to continue buying and selling Bitcoin.Customers who currently hold Bitcoin in their Circle account can still hold it insured or sell it for other currencies via the Circle app but not back to Bitcoin.

        Circle also announced that they are expanding to the Philippines and Korea via partnerships with Koreas Korbit and the, meaning U.S-based customers with friends or family in those countries can now use Circle as a remittance service.

        The question is now will customers use Circles payment-based messagingplatform over more established alternatives like Messenger and WeChat,both of which support payments. Many users tend to find and stick to one messaging and payment platform, and it seems unrealistic for them to leave places like Messenger (where they already have hundreds of friends on the platform) for a lesser-known app like Circle.

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        Bitcoin Mania Interrupted, for Now, After Outage Triggers Selloff

        It takes a lot to startle fans of bitcoin, the digital gold of the moment. But Wednesday was, well, a lot — a wild run of exuberant peaks and white-knuckled declines that left even diehards breathless.

        The dizzying rally in bitcoin, a bull market with few precedents in investing history, was abruptly interrupted by a market outage in the U.S. that seemed to captivate Wall Street even more than the day’s selloff in high-flying technology stocks.

        Only hours after soaring past $11,000 — a price that represents a gain of more than two-fold since September — bitcoin plunged nearly 20 percent in less than 90 minutes.

        Whether the swoon represented a brief setback or the start of something worse, the wild ride underscored just how volatile the cryptocurrency has become in what some warn could be one of the biggest bubbles of all time.

        “Bitcoin trading isn’t for the novice investor,” said John Spallanzani, chief macro strategist at GFI Securities LLC in New York, who does technical analysis on the cryptocurrency. “Corrections are fast and furious and you can get run over just like in the movie.”

        The day started with a touch of frenzy in the air, as the digital currency took its first trip past $10,000 and yet another celebrity — this time, pop icon Katy Perry — tweeted about her fascination with the rally. But things suddenly seized up during U.S. hours when traffic swelled on on-line exchanges.

        Confusion reined in the market for hours. Investors fearful of missing out on the frenzy were greeted instead with service outages and delays. Coinbase tweeted that traffic on its platform hit an all-time high at eight times the peak demand experienced in June. Access remained unavailable to some users.

        The selling reached furious levels shortly after 1 p.m. in New York, when bitcoin fell back below $11,000 and didn’t stop until $9,009. It hovered just below $10,000 as of 4:30 pm.

        “Issues in the exchanges add to it without a doubt,” said David Mondrus, chief executive of Trive, a blockchain-based research platform. “When you have a lack of ability to exit, then people dump in order to exit faster.”

        For many, the retreat was overdue after bitcoin had rallied 20 percent in just four days in a run-up that drew increased warnings it was headed for a sharp retreat. The cryptocurrency ended September at $4,171.25.

        “It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,” Nobel Prize-winning economist Joseph Stiglitz said in a Bloomberg Television interview Wednesday. “Bitcoin is successful only because of its potential for circumvention, lack of oversight. So it seems to me it ought to be outlawed.”

        He joins a host of economists and financiers who’ve denounced the crypto rally as a craze, including most recently Vanguard Group Inc. founder Jack Bogle, who advised investors to “avoid bitcoin like the plague.”

        Proponents have heard those warnings for years, and watched bitcoin’s price rise 935 percent this year alone. Those kind of gains have grabbed Wall Street’s attention, evident Tuesday as buttoned-up financiers and analysts piled into CoinDesk’s cryptocurrencies conference in Manhattan, turning the event into a standing-room-only affair.

        Still, Wednesday’s jarring reversal had Spallanzani reminding investors that the ride down might not be over, at least for now.

        “If bitcoin can’t hold above $10,000, a technical correction could be underway, with a drop to as low as $8,400,” he said. “Asian trading tonight should be an interesting session.”

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          Bitcoin Soars Past $8,000

          Bitcoin’s relentless and volatile rally shows no sign of abating, with the world’s largest cryptocurrency defying growing bubble fears to hit yet another milestone.

          Bitcoin rose as much as 7.7 percent to a record $8,290 as of 2:47 p.m. in New York. It’s been a tumultuous year for the virtual currency, with three separate slumps of more than 25 percent all giving way to subsequent rallies.

          Even the most bullish analysts can’t keep up with bitcoin’s rally. Standpoint Research’s Ronnie Moas, who says bitcoin’s market cap will one day catch up to gold at $8 trillion, is raising his 2018 price target for the digital currency to $14,000 from $11,000. He had increased it from $7,500 last month.

          “The inflation in this thing is massive,” Luke Hickmore, a senior investment manager at Aberdeen Standard Investments in London, said in an interview with Bloomberg TV. “When will it collapse? Who knows. It will cause a lot of pain.”

          Even as many skeptics call the asset a bubble waiting to pop, it’s becoming too big for many on Wall Street to ignore. CME Group Inc., the world’s biggest exchange, will start offering futures trading on bitcoin next month, while senior executives at Goldman Sachs Group Inc. and Citigroup Inc. have said they are researching cryptocurrencies and the blockchain technology that underlies them.

          Terminal users can read more on bitcoin and bitcoin cash with our Q&A.

          Recent volatility has stemmed from a pickup in people switching to alternative virtual currencies, notably bitcoin cash. That’s gaining popularity due to lower transaction costs and faster speed. New cryptocurrency iterations are springing up as disagreements over bitcoin’s design persist and opportunities for making a quick buck prove hard to pass up.

          Bitcoin cash dropped 0.6 percent on Monday to trade at $1,189, down from a high of $1, 388 on Nov. 12, prices show. Bitcoin has advanced more than 700 percent this year and now boasts a market value of more than $130 billion.

          “I find it remarkable and somewhat frightening how, no matter how much bitcoin is pummeled by sellers, it simply bounces back even stronger,” said Lukman Otunuga, an analyst at currency brokerage ForexTime Ltd. “Will bitcoin hit $10,000 before year end? This is the question every investor is asking.”

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            Bitcoin Plunges 29% From Record High

            Bitcoin plummeted, extending its drop to 29 percent from a record high, on speculation some traders were buying its offshoot amid a struggle over the digital currency’s future.

            Bitcoin dropped to as low as $5,605 on Monday, from a record high $7,882 reached on Wednesday, data compiled by Bloomberg show. Bitcoin cash rose to $2,426 on Sunday, before plunging to $1,379 as of 9:32 a.m. in Hong Kong, according to

            Bitcoin has slumped since the cancellation of a technology upgrade to increase its block size, amid speculation supporters of the proposal bid up bitcoin cash to undermine the original bitcoin.

            “It’s the bitcoin cash pump,” said Arthur Hayes, chief executive officer of BitMEX, a cryptocurrency exchange based in Hong Kong. “It’s obviously a coordinated action of certain individuals who have a vested interest in bitcoin cash.”

            At the heart of the debate is how bitcoin’s underlying technology can accommodate rising transactions as its popularity booms. While increasing its block size would help, opponents argue it would only concentrate mining power, undermining the decentralized nature of bitcoin.

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              Bitcoin Crashes and Then Surges in Wild Weekend Action

              Bitcoin is proving that investing in digital currencies isn’t for the faint of heart.

              After plunging as much as 29 percent from a record high following the cancellation of a technology upgrade on Nov. 8, the largest cryptocurrency came roaring back in early trading Monday before fluctuating between gains and losses.

              “Crypto trading is not for the novice investor,” said John Spallanzani, chief macro strategist at GFI Securities LLC in New York.

              While multiple reasons are being cited for the price volatility, one of the more viable is that some investors are switching to alternative coins. Bitcoin cash, an offshoot of bitcoin that includes many of the technical upgrades being debated by developers, has more than doubled in the same period.

              “We have seen similar steep falls in bitcoin throughout the year — specifically in June and September — but every time a considerable decline occurs, new investors jump in to experience the new asset class,” Hussein Sayed, chief market strategist at ForexTime Ltd., a currency broker that uses the brand FXTM, wrote in a note Monday.

              While markets had been focusing on bitcoin’s more than 500 percent surge this year, bitcoin cash was gaining popularity because of its larger block size. That’s a characteristic that makes transactions cheaper and faster than the original.

              When a faction of the cryptocurrency community canceled plans to increase bitcoin’s block size on Wednesday — a move that would have created another offshoot — some supporters of bigger blocks rallied around bitcoin cash.

              The resulting volatility has been extreme even by bitcoin’s wild standards and comes amid growing interest in cryptocurrencies among regulators, banks and fund managers. While skeptics have called its rapid advance a bubble, the asset has become too big for many on Wall Street to ignore. Even after shrinking as much as $38 billion since Nov. 8, bitcoin boasts a market value of about $110 billion.

              Supporters of bitcoin’s technology upgrade “are now switching support to bitcoin cash,” said Mike Kayamori, head of Tokyo-based Quoine, the world’s second most-active bitcoin exchange over the past day. “There’s a panic about what’s happening. People shouldn’t panic. Just hold on to both coins until we see how it plays out.”

              Read more: A QuickTake on the bitcoin community’s infighting

              The cancellation of last week’s bitcoin upgrade has left users to choose between the two versions of the cryptocurrency. On one side is the original bitcoin, powered by so-called SegWit technology, which aims to improve its performance by moving unessential data off of its underlying blockchain. On the other side is bitcoin cash, which allows its blockchain to handle eight times as much data as the original.

              Proponents of bitcoin cash believe their approach is simpler and closer to the original goal of bitcoin, which was described primarily as a payment system in its white paper. Supporters of the original bitcoin say that vision is too limited, and that by improving the blockchain with SegWit technology, bitcoin can become a new digital-asset class that not only supports payments but countless other functions.

              Upgrade Called Off

              While bitcoin cash has been around for months, it saw limited support as the community awaited last week’s technology upgrade for the original bitcoin, which promised similar features. Now that the upgrade has been called off, businesses that use the cryptocurrency primarily as a payment method are expected to increase adoption of bitcoin cash.

              While bitcoin cash surged over the weekend, it hasn’t been a straight line up. The cryptocurrency was trading at $1,300 at 4:45 p.m. in New York, down from a high of about $2,478 on Sunday, prices show.

              Bitcoin has been similarly volatile; it initially rose after news that it would avoid another split, but the gains were short-lived. Its plunge earlier Monday to as low as $5,605 compares with an intraday record $7,882 on Nov. 8.

              Volume across bitcoin exchanges jumped to 436,021 bitcoins on Sunday, the highest since September, data show. BitMEX, an exchange for cryptocurrency derivatives that allows shorting, saw record activity on Sunday, Chief Executive Officer Arthur Hayes said.

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