Bitcoin’s had another volatile week lunging up from $15,970 at midnight (UTC) on Monday up to $18,853 at the time of writing (19:00 UTC, Friday, November 20th), That’s almost +18% in a few hours shy of five days.
This spike has had an interesting effect on online poker player cashouts. The Winning Poker Network’s C.E.O. explained to Bloomberg that players are more or less using the cashout button to play the Forex.
“Right now 90-95% of our payouts are people asking for Bitcoin because it’s going up,” Nagy told Bloomberg. “We are constantly having to go out and buy Bitcoin. Lots. More than we have ever had to before.”
Poker for Bitcoin
Bitcoin has enjoyed a solid rally since it took a dip in April along with the rest of the economy. But it bounced back fast.
One theory is that online poker is driving the rapid rise. It’s no secret that the poker community has been playing the Bitcoin market in a big way as investors. But recent years have also seen more online poker clients — especially those with client bases in the U.S. — move towards offering Bitcoin wallets along with more traditional fiat currencies.
WPN’s player base is roughly 60% U.S. players according to Nagy. With brick and mortars across America closed, players are forced to contend with the patchwork nature of online poker’s legality, regulation, and tax status across the fifty states.
One thing driving Bitcoin cashouts is the perception of privacy and security it enjoys. Cashouts are seen as being relatively well hidden from the prying eyes of the I.R.S. and online poker regulators.
Nagy is quick to point out that this aspect of the currency isn’t something WPN can regulate. The onus is on players and their accountants to do right by the taxman.
Hedging against variance
Nagy mentions that this bull market has had such an effect that WPN is having to work with over-the-counter brokers to get their hands on enough crypto. Meanwhile, demand is giving the brokers the confidence to insist on premiums of 1.5% on their purchases.
Many who were burned in the Bitcoin crash at the end of 2017 will be viewing this rapid rise with caution. But for the moment the market doesn’t show signs of slowing.
That volatility is why WPN doesn’t hold Bitcoin, instead, it converts Bitcoin cashouts to fiat ASAP, reducing their exposure to rapid short-term changes in value.
Though sometimes it just isn’t possible to shift Bitcoin fast enough. “When Bitcoin drops or does something significant,” Nagy says. “We have people send us $100,000 or $200,000 in Bitcoin because it’s the fastest way to liquidate it. And then we are kind of stuck with it.”
Featured image source: Flickr