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Bitcoin Value Drops as Turkey Prohibits Cryptocurrencies

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  • Uncommon Knowledge
  • Bitcoin fell 4.32% in early trading Friday after Turkey banned the use of "excessively volatile" cryptocurrencies in commerce. Turkey's central bank said Bitcoin and other cryptocurrencies are unregulated and could be used to fund illicit activities.

    "Their use in payments may cause non-recoverable losses for the parties to the transactions and include elements that may undermine the confidence in methods and instruments used currently in payments," Turkey's central bank said.

    Jason Siesser chemical weapon dark web bitcoin
    A Missouri man named Jason Siesser has been charged with ordering a chemical weapon that could kill up to 300 people from the dark web using the Bitcoin cryptocurrency. In this photo, a member of the German Chemical Corps, a part of the German military that specializes in anti-nuclear, chemical and biological weapons operations, holds up a rapid tester whose two red lines indicate a positive result for chemical contamination during a demonstration at battalion headquarters Non ovember 19, 2001 in Sonthofen, Germany. Sean Gallup/Getty

    Many investors use Bitcoin as an inflation hedge. Reuters reported that the value of Turkey's lira fell about 16% last month. The Turkish government last week demanded crypto trading platforms turn over user information.

    In the U.S., Europe and much of the world, Bitcoin is viewed as a long-term bet on future price appreciation. Major investors buy and hold Bitcoin, reducing the number of coins available to new investors or those seeking to increase their holdings and driving up the spot price.

    Major financial institutions have made cryptocurrency available to top clients and others now offer Exchange Traded Funds that track the price of Bitcoin.

    The Financial Conduct Authority, a watchdog agency in the United Kingdom, warned that individuals investing in Bitcoin should be prepared to lose all their money.

    China banned cryptocurrency trading in 2017 and is testing its own digital currency that some believe could challenge the U.S. dollar. India's parliament is considering a bill ban Bitcoin and other cryptocurrencies and is also exploring its own digital currency.

    china, digital, yuan, shanghai, currency
    A sign for Chinas new digital currency, electronic Chinese yuan (e-CNY) is displayed at a shopping mall in Shanghai on March 8. The People's Republic is pressing ahead with an ambitious digital currency project that may serve as a conduit for bypassing a U.S.-dominated global banking system. AFP/Getty Images

    There are no proposals to ban Bitcoin in the U.S., but officials have called for stricter regulation. In prior statements, U.S. Treasury Secretary Janet Yellen warned that extremists can use cryptocurrencies to fund illegal activities.

    "At the same time, we know they can be used to finance terrorism, facilitate money laundering, and support malign activities that threaten U.S. national security interests and the integrity of the U.S. and international financial systems," Yellen said in February.

    At a February hearing by the House Financial Service Subcommittee on National Security, witnesses said investigators lack full authority to pursue financial transactions of alleged domestic terrorists using Bitcoin or other cryptocurrencies.

    Investigators believe transfer of 28.15 Bitcoins in December 2020, valued at more than $500,000 at the time, to 22 alt-right recipients may have been used to help organize the January 6 riot at the U.S. Capitol.

    Christine Lagarde, president of the European Central Bank in Frankfurt, Germany, has warned that Bitcoin is sometimes used for "totally reprehensible money-laundering activity."

    Ethereum, the second most popular cryptocurrency whose price often moves in tandem with Bitcoin, dipped 2.41% to $2,416.43 in mid-day trading Friday.

    But Dogecoin, the parody cryptocurrency launched in 2013, rallied 189.27% to $0.36, CoinDesk reported.

    The worldwide supply of Bitcoin is capped at 21 million, but there are about 128 billion Dogecoins in circulation. Supply can increase a maximum of 5 billion a year.

    US Bookies, an online sports book, gives 5-to-1 odds that Doegcoin will be worth more than $1 by the end of 2021.

    Tesla CEO Elon Musk, who previously called Dogecoin "BS", on Thursday tweeted "Doge Barking at the moon," and included a photo of a painting by artist Joan Miro titled "Dog Barking at the Moon."

    Billionaire tech CEO Elon Musk has posted about cryptocurrency Dogecoin for months, inadvertency causing spikes in the currency's price. In this photo illustration visual representations of digital cryptocurrencies, Dogecoin and Bitcoin, are displayed on January 29, 2021 in Katwijk, Netherlands. Yuriko Nakao/Getty Images

    Musk has invested $1 billion in Bitcoin, and one analyst believes his return on the cryptocurrency bet exceeds Tesla's 2020 sales. His witty and playful tweets appeared to boost Bitcoin's price.

    Musk said he'll accept Bitcoin as payment for Tesla's electric cars. US Bookies give 10-to-1 odds that he'll also accept Dogecoin.

    Billionaire entrepreneur Mark Cuban, owner of the NBA's Dallas Mavericks, last month said the team accepts Dogecoin for its merchandise.

    In a tweet complete with three rockets blasting higher, Cuban said, "The @dallasmavs have done more than 20,000 #Dogecoin in transactions, making us the LARGEST #DOGECOIN MERCHANT IN THE WORLD! We thank all of you and can only say that if we sell another 6,556,000,000 #DOGECOIN worth of Mavs merch, #dogecoin will DEFINITELY HIT $1!!!"

    Musk has mused about Dogecoin becoming the world's currency, proving that while the cryptocurrency doesn't fetch much on the market, he and Cuban understand that you can buy a lot of publicity with it.

    In mid-day trading Friday, Bitcoin changed hands at $61,560.59, down 5.04% from the recent record high of $64,829.14. Despite Friday's dip, Bitcoin is still up 111.14% for the year, CoinDesk reported.

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    The COVID-19 pandemic created a surge on online sales, boosting electronic payments processor Stripe. The privately held San Francisco-based company looked like it faced hard times when much of the economy closed last spring as part of the effort to curb spread of the coronavirus.

    Stripe logo
    Stripe logo stripecommunications.com

    The shutdown pounded the economy, especially the travel and hospitality industries as customers cancelled reservations. This slashed fees Stripe collects for its services.

    The GDP plunged and unemployment soared to 14.7% a year ago. But commerce, including billing for service industries, moved online and Stripe's prospects brightened.

    Stripe said it provides services to startups, mom-and-pop businesses, regional companies and major corporations in 120 nations, including Amazon, Shopify, Microsoft, Uber, Lyft, Zillow, Booking.com, National Geographic and Expedia.

    As a privately held company, Stripe isn't required to report revenue and earnings.

    But The Wall Street Journal, citing "people with knowledge of its finances," said the company's revenue increased about 70% last year to around $7.4 billion.

    There's speculation about an IPO, but Stripe has made no announcement and hasn't filed a registration statement with the U.S. Securities and Exchange Commission.

    In the U.S. this year, e-commerce sales are expected to make up about 15% of total retail sales.

    There's likely to be strong growth ahead. Internet-based businesses are growing faster than the economy as a whole, but only about 3% of global commerce is now conducted online, the company said.

    Consumer spending represents about two-thirds of the U.S. economy. Retail sales, including purchases at brick-and-mortar stores, online and restaurants, increased 9.8% in March, the U.S. Commerce Department reported.

    Analysts surveyed by Dow Jones expected sales to increase 6.1%. Retail sales fell 2.7% in February. It was the biggest jump in consumer spending in nearly a year.

    Auto sales increased 15.1%, and clothing sales jumped 18.3%.

    Morgan Stanley, a New York investment bank, raised its estimate of the economy's annual growth by one percentage point to 9.7%. It grew at a 4.3% annualized rate in the fourth quarter.

    #27. James Gorman (Morgan Stanley)
    James P. Gorman, CEO, Morgan Stanley Owen Hoffmann / Getty Images

    Initial jobless claims fell to 576,000 last week from 769,000 a week earlier, the U.S. Bureau of Labor Statistics said.

    Higher consumer spending was driven by a continued reduction in unemployment and billions of dollars in government stimulus funds sent to individuals. The current unemployment rate is 6%, the U.S. Bureau of Labor Statistics said. New York investment bank Goldman Sachs expects it to drop to 4.1% by the end of the year.

    The Dow Jones Industrial Average, a measure of 30 major stocks, climbed above 34,000 Thursday as companies continued to report strong earnings.

    The U.S. Federal Reserve, the nation's central bank, said factory output grew 2.7% in March after falling 3.7% in February.

    Auto sales increased 15.1% and clothing sales jumped 18.3%.

    Production has been hampered by a shortage of semiconductors and supply chain kinks, including blockage of the Suez Canal by an out-of-control ship.

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    Doctor of Dump & Pump

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