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Bitcoin Price Gains 10% as Cryptocurrency Market Continues to Recover

Last Updated March 4, 2021 5:03 PM
Joseph Young
Last Updated March 4, 2021 5:03 PM

The bitcoin price has increased by more than 10 percent over the past 24 hours, as the majority of cryptocurrencies in the global market have recovered from the recent correction.

Whales Sell-Off

Previously, CCN.com reported that the major correction which occurred earlier this week was likely triggered by the sell-off of bitcoin by whales and institutional investors within the traditional finance market. Some analysts speculated that large-scale traders sold off massive amounts of bitcoin to cash out short contracts on the Cboe and CME bitcoin futures exchanges.

The theory that the sell-off of whales triggering a domino effect across all major cryptocurrency exchanges and leading to a decline in the value of the cryptocurrency market is far more likely and realistic than the FUD in the Chinese and South Korean cryptocurrency markets.

Many reports, especially by mainstream media outlets, suggested that the cryptocurrency trading ban FUD coming from the Chinese and South Korean markets led to the decline in the price of bitcoin and other major cryptocurrencies.

While it is possible that the two markets had a small impact on the cryptocurrency market, given the insignificant trading volume of the Chinese market and the fact that the South Korean government has officially refuted cryptocurrency trading claims, it is highly unlikely that the two markets had any significant effect on the valuation of cryptocurrencies.

Amidst extreme market volatility and periods of uncertainty, cryptocurrency traders tend to reallocate their funds to major cryptocurrencies like bitcoin and Ethereum for stability, because the two cryptocurrencies have demonstrated a relatively low level of volatility over the past few months.

Both bitcoin and Ethereum have increased by around 10 percent over the past 24 hours, with bitcoin recovering beyond $12,500 and Ethereum rebounding to $1,100.

Factors of Bitcoin Price Surge in Short-Term

Currently, bitcoin remains as the only cryptocurrency leading financial institutions and banks are building infrastructure around. Most recently, a South Korean government official stated that the government is in consideration of allowing local financial institutions to operate bitcoin futures exchanges.

Additionally, the New York Stock Exchange (NYSE), has built a cryptocurrency price tracker for high profile institutions in the traditional finance industry and is currently awaiting for the approval of the US Securities and Exchange Commission (SEC) to list four bitcoin exchange-traded funds (ETFs) in the US stock market.

The introduction of bitcoin ETFs will allow individual traders in the regulated US stock market to easily trade bitcoin with existing brokerage accounts, drastically increasing liquidity and accessibility for individual investors.

While the majority of investors in the cryptocurrency market have shifted their funds from bitcoin to alternative cryptocurrencies over the past six months, as seen in the bitcoin dominance index, bitcoin still remains as the most dominant cryptocurrency or the reserve currency of the market that is stable and less volatile.

In the short-term, the network effect of bitcoin and the rapid increase in adoption of the cryptocurrency will likely lead the price of bitcoin to increase. As of current, bitcoin is showing better signs of recovery than it did over a week ago and is preparing to initiate a new rally.

Featured image from Shutterstock.