The digital currency markets have seen a host of industry-specific news over the past weeks, including events like the closure of Silk Road and announcement that Baidu would accept bitcoin for some services. While such micro events continue to play a large part in the bitcoin markets, the reaction to the agreement over the US debt limit illustrates the clear impact macroeconomic events increasingly have on bitcoin.
After weeks of debate and a partial government shutdown, US legislators reached an agreement to extend the United States’ borrowing capacity. In doing so, a default by the world’s largest debtor was avoided and financial markets reacted accordingly with mid- and long-dated UST bid heavily and the USD selling off. The response from bitcoin markets was dramatic, sending USD/BTC prices down 5% in a matter of hours before slowly recovering just under half of those losses.
Notably, the volume during the drop was significant – including the highest hourly volume since the Silk Road closure and 10x the average hourly USD/BTC volume since the beginning of September. The next closest hourly volume over that time period occurred amid standout bitcoin-related events, such as Belgium’s finance minister vocalizing a lack of objection to bitcoin.
As the data shows, macroeconomic drivers are beginning to have a profound impact on bitcoin. With increasing amounts of professional/institutional capital moving into the space and each individual entity in the industry having a lower relative impact, bitcoin is on its way to becoming a global asset, rather than a niche market driven only by internal news.