Earlier today, on October 12, the Bitcoin price experienced a sudden surge in price, demonstrating an overnight increase in value of 8 percent, from $4,780 to $5,220.
On October 11, CCN reported that the Bitcoin price had recorded a slight correction from $4,900 to $4,780, after increasing by over $530 in a span of three days. But, the report also noted that the minor correction had placed Bitcoin at a better position to gain momentum and establish new highs in the short-term.
“Normally, when the price of Bitcoin increases by over 10 percent, it tends to correct its short-term surge, providing a more stable platform to build momentum and achieve new highs,” the report read.
In the past 10 hours, the Bitcoin price has done exactly that. It has picked up strong momentum, increasing from $4,780 to $4,950, and then rising by over 8 percent in a three-hour span.
Major Factors Behind the Increase in the Bitcoin Price
It is difficult to pinpoint one single driving factor behind the Bitcoin Price surge because through the exit of the Chinese market, the global Bitcoin exchange market has restructured and the Japanese market has evolved into the largest Bitcoin market overtaking the US.
Three major factors that have contributed to the recent price surge of Bitcoin most likely are the SegWit2x hard fork in November, introduction of national licensing program for cryptocurrency exchanges in Japan, and the rise in demand for Bitcoin in the US market by institutional investors.
As CCN previously reported, the SegWit2x hard fork in November is beneficial for the short-term price trend of Bitcoin because investors that do not believe SegWit2x will become the majority chain would in invest in Bitcoin and investors that do believe SegWit2x will become the majority chain would also invest in Bitcoin, as it is the only way to obtain SegWit2x coins upon its launch.
With major Chinese mining pools such as ViaBTC clarifying that they will allocate all of their hashrate to mining SegWit2x coin or B2X, it is likely that the Bitcoin community has gained confidence over the original Bitcoin blockchain.
More importantly, as prominent Bitcoin investor and Atlanta Digital Currency Fund partner Alistair Milne mentioned, miners tend to follow more profitable Bitcoin blockchains and ViaBTC’s statement has demonstrated such tendency.
“Miners follow the money, they do not lead the money. This has never been illustrated more clearly than by Bcash and the joke that is their difficulty adjustment algorithm. A rational miner fears the market negatively valuing the tokens they are trying to mine. They are extremely sensitive to profit & loss (no matter how rich they pretend to be),” wrote Milne in an analytical blog post.
Institutional Investors Preparing to Invest in Bitcoin
Furthermore, Billionaire hedge fund legend Mike Novogratz have stated in an interview with CNBC that institutional investors and key figures in the US finance industry are preparing to engage in the cryptocurrency and Bitcoin markets.
At the moment, a variety of positive developments in the Bitcoin industry such as trading volumes from China flowing into a more mature and efficient market in Japan, the Russian government’s intent to regulate and legalize cryptocurrency usage, and increase in demand for Bitcoin from institutional investors are contributing to the momentum of the Bitcoin price.
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Last modified: May 21, 2020 9:12 AM UTC