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Satoshi Nakamoto 'Unmasking' Might Be Driving Bitcoin's Price Rally

(@pete_rizzo_) | Published on December 9, 2015 at 04:39 BST
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The price of bitcoin is rallying once again, spiking abruptly by $16.50 across major exchanges on the CoinDesk USD Bitcoin Price Index (BPI) over a 15-minute period yesterday.

The movement began at 23:15 and ended at midnight UTC when the price hit a high of $418, with the largest movements taking place from 23:15 to 23:30.

At press time, prices were once again on the rise, pushing the digital currency's value to a one-month high of $421.83, its highest total since 5th November.

coindesk-bpi-chart (1)

Experts were less certain about the reason for the price escalation, with theories ranging from the continued influence of activity in the global Chinese Yuan (CNY) market to speculations that the potential unmasking of bitcoin creator Satoshi Nakamoto had calmed investor concerns about the digital currency.

Help from Satoshi?

Market analysts so far seem split on the cause of bitcoin’s latest price increase, with the rise in value following reports by tech industry news outlets Wired and Gizmodo that published new evidence that bitcoin’s enigmatic creator may be a pseudonym for Australian businessman Craig Steven Wright and US forensic researcher Dave Kleiman.

First published by Wired at 21:25 UTC, however, the news appeared online roughly two hours before the price increase. Still, some market observers believe that clarity on who is the owner of Satoshi’s roughly 1 million unspent bitcoins (worth approximately $465m at press time) could have had a psychological impact on the market.

“I think it is the Satoshi news because the articles describes how the 1.1m BTC allegedly are cryptographically locked up, only to be released by January 2020,” editor in chief at Adamant Research Tuur Demeester told CoinDesk. “I think the market is acting on this news, placing a bullish bet on this story being true.”

With 14.9m BTC in circulation according to data from Blockchain’s market data service Blockchain.info, Nakamoto's estimated holdings would comprise roughly 7% of the total global market supply.

According to Gizmodo, its sources provided the media outlet with a document of an unfinished legal contract that shows Kleiman, now deceased, would be given custody of the 1.1m BTC until 1st January 2020, at which point they would be repaid to Wright.

Notably, it also provides clarity on the conditions under which coins could be sold.

“The trust fund PDF signed by Wright’s late friend David Kleiman keeps those coins locked in place until 2020, yet gives Wright the freedom to borrow them for applications including ‘research into peer-to-peer systems’ and ‘commercial activities that enhance the value and position of bitcoin,” Demester added.

The documents, though unconfirmed, would nonetheless give market observers a new understanding of when the holdings may be sold on the market, providing clarity to an issue that has long been a source of uncertainty for investors.

China connection

Wired and Gizmodo weren’t the only news sources that could have impacted price, however, as influential alternative finance blog Zero Hedge published a story showcasing the connection between the bitcoin price increase and a decrease in the offshore CNY market.

The Zero Hedge piece correlated the $16.50 price increase with a 12 price interest point (PIP) decrease in the value of CNY against the US dollar. The blog suggested that it was seeing traders become increasingly interested in bitcoin and CNY and that they were moving against the US dollar.

BTCVIX, an organizer of bitcoin trading collective Whale Club, indicated that he believes this is the primary instigator of the increase.

“The rumors of continued devaluation have been ramping up in the wake of that IMF decision [to provide CNY special drawing rights],” he told CoinDesk.

With the move, CNY joined currencies including the US dollar, euro, yen and British pound in the international financial organization’s benchmark reserve currency basket, a move that was widely hailed as a sign of the country’s growing economic influence.

The view has been increasingly put forth by market observers, including former bitcoin derivatives exchange founder George Samman, who blogged about the potential price move as early as 30th November.

Blocksize debate

Other investors put forth the idea the price increase could have been connected to positive news from the latest Scaling Bitcoin conference.

Held in Hong Kong this week, the two-day event saw key industry stakeholders including developers and miners move forward toward consensus on how the network could be altered to handle more transactions per second, and thus better compete with other financial processing systems.

“I think the hard fork debate was weighing on the market,” Crypto Currency Fund manager Tim Enneking told CoinDesk.

The price increase follows growing enthusiasm in the development community for one of two proposals on increasing the blocksize – a change to how block size is calculated in the protocol called segregated witness and a static increase to 2MB.

Still, Enneking said it was likely the sum of factors as none of the possible options represented “radical news” events, concluding:

“These movements are rarely due to a single event – or so us pundits claim.”

Images via CoinDesk, Shutterstock

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