• Bitcoin sets a daily high of USD 7,390 on mildly volatile Saturday trading
  • The Hong Kong Institute of Bankers has welcomed six virtual banks as corporate members
  • Bitcoin sellers on Localbitcoins Iran are asking for USD 24,000

 

Bitcoin looks to set a firm foot above the USD 7,200 support levels on the weekend, with Asian trading taking it as high as USD 7,390, before testing USD 7,226 (CoinDesk) in mildly volatile swings. Europe now does seem to be interested in looking for new highs and we’ll find out if the Americas are as willing in a few hours.

We see more bullish news coming out of the woodworks in the first week of January. For once, Hong Kong bullish Bitcoin news isn’t about the protestors but about the Hong Kong Institute of Bankers (HKIB), which has now welcomed six virtual banks as corporate members.

The press release from the non-profit training and certification institution now mentions among its corporate members Airstar Bank Limited, Fusion Bank Limited, Livi VB Limited, Ping An OneConnect Bank (Hong Kong) Limited, SC Digital Solutions Limited and WeLab Bank Limited.

Carrie Leung, who heads the HKIB as CEO, was upbeat about so many new virtual banks now gaining recognition in the banking sector. She said this marked a new era in the modern banking sector in the region:

“The HKIB now boasts a member base with 103 Corporate Members and Corporate Affiliates, and over 6,000 Individual Members. With the exponential growth in the local Fintech sector, we believe that more virtual banks and Fintech companies will see the importance of joining our community in the years ahead.”

Hong Kong’s attitude towards blockchain and virtual currency isn’t new, with its Monetary Authority (the equivalent of its central bank) signing in November with the People’s Bank of China a memorandum of understanding for the creation of a Proof-of-Concept for a trade finance platform from Q1 2020. This would link two existing projects from the former’s HKMA eTradeConnect to the PBoC’s Trade Finance Platform.

HKIB has always been promoting the development of fintech, focusing on digital banking and cybersecurity. Its aims this year is to seek out more opportunities for talent exchange and other industry initiatives. It is likely that it will be aiding the Hong Kong Monetary Authority in its research for central bank digital currency applications.

Meanwhile, Bitcoin continues to heat up both in price and in demand in the Republic of Iran. We mentioned in yesterday’s analysis that a Trump-sanctioned attack in Iraq had killed a top Iranian general, leading almost immediately to a rise in the US dollar and Bitcoin. And now, the demand for Bitcoin amid a spiraling rial (IRR) seems to be spiking in the oil-rich nation.

According to data from Bitcoin sellers on peer-to-peer trading platform Localbitcoins, traders are now asking for about IRR 1 billion for 1 Bitcoin — the equivalent today of about USD 24,000. However, when asking ourselves if this was a reflection of the situation on the ground, we could find that it may not be such a premium after all.

Price demands in countries with weak and weakening national currencies typically see a surge in Bitcoin price. We’ve seen this in the past in Zimbabwe, Venezuela and Argentina, where hyperinflation means that national fiat loses value against the US dollar on a daily, if not hourly basis.

Simply put, sellers are willing to accept local currency, but because they are already pricing in the coming inflation, people are asked to pay what sellers believe the currency will be worth in US dollars in a few days or weeks. Also, these countries tend to have a dual exchange rate to try and hide this inflation. The official rate set by the central bank and the actual market rate — which is what people would get in the market if they were to exchange fiat to US dollars.

Thus, it is likely that Bitcoin sellers, asking for IRR 1 billion, would probably only get in the market USD 7,300 (which is the estimated global price for Bitcoin now). The USD 24,000 rate is only on paper and available only to privileged people, says crypto expert Ali Beikverdi, quoted by Cointelegraph:

“It’s only possible for few businesses and government with special procedure to get that rate. The official rate is what the central bank says. But literally, no one except some government organizations can get that rate while no one can use it. It’s a joke.”

 

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