Bitcoin, Gold & Silver Liquidated For Alibaba?
Alibaba Group had a huge debut with its shares beginning to trade at $92.70, up over 36% from its IPO price of $68. That increase on the New York Stock Exchange raised the company’s total market value from $168 billion to over $220 billion. Alibaba had raised $21.8 billion in its hotly anticipated IPO, the largest in US history, dwarfing Facebook Inc’s IPO.
The price of bitcoin has fallen from its $513 price of one month ago to as low as $381.17 on Friday. This week alone the crypto-asset fell from $513 to $381.
— Richard Hobbs (@KenmalBusiness) September 19, 2014
— Gaming floor (@Gamingfloor) September 19, 2014
Sembro Development President Ian Worral wrote for Bitcoin Magazine “that the Chinese Bitcoin holders began dumping their holdings earlier this week to free up capital to invest in Alibaba when it goes public.”
Worrall’s assessment is based on his software firm’s finding that much of the bitcoin trade volume is coming from China. Chinese exchanges traded 52% more volume compared to American exchanges over the past month.
Peter Schiff disagrees with this theory, saying “that’s just grasping at straws.”
“They’re just trying to find some excuse [for bitcoin’s slide],” Schiff said. “I just can’t think there are that many bitcoin guys that are going to jump into Alibaba.”
Raffael Denielli, of Matlab Trading, believes an Alibaba-influenced selloff could be possible, but that it does not make total sense to explain bitcoin’s current slide.’
“Selling your Bitcoins yesterday (and during the night) will only put USD into your Bitcoin exchange account. From there you have to still transfer it to your stock broker which usually takes a couple of days,” he wrote in an email to CNBC. “In other words: if (!) people sold Bitcoins yesterday to buy into Alibaba then they are a bit late to the party.”
Precious metals decreased this morning, with silver hitting its lowest level since August 2010 and gold posting a 1% weekly drop for third weekly decline. Silver’s drop represented its biggest one-day drop since December 12, 2013.
“It’s the same story since last week. Gold is under pressure with the dollar at an extremely lofty level, U.S. equities at all-time high, and expectations that U.S. interest rates will rise eventually,” David Meger, director of metals trading at brokerage Vision Financial, said.
The silver selloff worsened once the metal broke the $18 dollar level, and technical selling began. Earlier this week, silver’s 50-day moving average fell below its 200-day moving average.
Ultimately, Alibaba had little to do with the selloff in Bitcoin, gold and silver. The dollar has had lots of strength behind it and turbulence overseas, including the Scottish referendum, all increased demand for the dollar. These circumstances were set before Alibaba came into the picture.