Yes, while the rest of the world is trading Bitcoin (BTC) around the $4k mark, the cryptocurrency exchange Bitcoinfundi in Zimbabwe saw prices of Bitcoin surge to $7200 today.
Though surprising, it is not the first time we have seen popularity of BTC rise sharply in places where monetary issues exist. In Venezuela we have seen surges in demand this year (and subsequently in mining) due to hyperinflation, repeating in part the story of Ukraine in 2015.
However, even in Western countires like the USA, a highly regulated market, we have seen BTC price rising due to high demand and limited supply. Case in point is the Bitcoin Investment Trust that has been for a long time been trading well above par. The ETF which tracks Bitcoin performance has been trading between 50-100% above the actual price since well before I started writing about it in July. The reason for this is the fact that the ETF has been one of the only means for certain institutions to invest in the cryptocurrency as they are bound by regulatory limitations. The result is shown in the graph below which shows one of the ETF shares, tracking roughly 1/10 of a Bitcoin price movement. Yes the price would indeed be close to $7200 here (as it reached almost $720 for effectively 1/10 of a BTC).
However, now it is it is turn for Zimbabwe to take the spot light. A premium of 85% has resulted in a record breaking BTC price of $7200. But why?
Basically it is a combination of a few things:
- Hyper inflation calling for investment into stores of value, e.g. Bitcoin
- External (credit card) payments are difficult or sometimes impossible to make, making crypto payments a sound alternative
- Restriction of flow of funds in and out of the country (where did we see this before???), resulting in investors trying to look for ways to send park their money outside the country.
These factors all led to a surge in demand for Bitcoin. This, paired with an illiquid trading book and no arbitrage opportunities due to restriction in capital in and outflow, caused the price of BTC to surge to extreme levels (compared to current levels elsewhere in the world). In time though these levels may seem entirely normal to the rest of the world, just not yet.
If anyone was doubting the usefulness of cryptocurrencies, the examples in this article should demonstrate that cryptocurrencies have valid use cases and have a bright future ahead of them.
References:
https://cointelegraph.com/news/ukraines-272-hyperinflation-rate-boosts-bitcoins-prospects-in-eastern-europe
https://cointelegraph.com/news/bitcoin-mining-thrives-in-venezuela-thanks-to-hyperinflation-and-free-electricity
http://www.techzim.co.zw/2017/09/bitcoin-fetches-85pct-premium-in-zimbabwe/
Images:
https://www.google.co.uk/search?q=bitcoin+investment+trust+price&rlz=1C1GGRV_enGB751GB751&oq=bitcoin+investment+trust+price&aqs=chrome..69i57j0.7000j0j7&sourceid=chrome&ie=UTF-8
https://www.dreamstime.com/stock-illustration-bitcoin-currency-symbol-flag-zimbabwe-image93366294