This article is written by Anupam Varshney. Anupam is co-founder of Bitcoinprice.com and has covered Bitcoin situation in various countries, including India, South Africa, and Canada.
Factors behind Bitcoin’s unprecedented rally
With a price increase from $5,732 on October 28th to $7,457 on the 8th of November, Bitcoin has definitely been attracting a lot of media attention this past week, given its unprecedented bullish rally.
Bitcoin doubters throughout the world are left baffled by the recent price increases. Following a multitude of negative comments from industry leaders, central banks and governments, the price still managed to increase. Many are now wondering, why is the market so optimistic?
In this article, we will attempt to explain some of the main factors behind the digital currency’s recent price surge.
Not long ago, China decided to crack down on digital currency exchanges by forcing them to suspend their services. This has led to the demise of China as the world’s leading country by trading volume. As expected, most of the exchanges operating within its territory advised users to withdraw their funds and stopped providing exchange services.
Trading volumes then headed out to other countries, such as South Korea, Singapore and Japan, thanks to their friendly bitcoin regulation for businesses. However, recent reports have indicated that China may be preparing to once again allow trading within its territory, on stricter regulation. While there is no official word on the matter from government officials, many believe that this may have been one of the factors behind the recent rally.
Having the world’s biggest derivatives operator announce that they are preparing to launch Bitcoin futures contracts is definitely big news. This would bring institutionalized investors to the world of digital currencies, and hence lead to more capital being invested in Bitcoin.
The cash-settled futures contracts will facilitate the development of more complex financial products based on the digital currency. This also has the potential to facilitate mass-adoption and eventually leading to the approval of Bitcoin ETFs.
According to some analysts, the upcoming SegWit2x hard fork is one of the main reasons why we’re seeing Bitcoin achieve new highs. The theory is that, investors and traders are not only buying more and more Bitcoin, but also converting their altcoins (such as Ethereum, Litecoin, Monero) into Bitcoin, in order to get free ‘airdrop’ S2X coins.
People who are against SegWit2x hard fork claim that the S2X supporters, which are mostly miners and some prominent figures, are the ones who are buying a lot of Bitcoin. As per critics, when exchanges allow deposits and give them 2x and 1x coins, they will dump 1x as much as they can. Doing that, 2x price will increase.
Both these scenarios have lead a significant increase in trading volumes, taking Bitcoin price through the roof.
The ICO craze, which basically allows startups to hold crowdfunding campaigns that benefit them, clients and investors, has led to millions of dollars invested into a multitude of blockchain-based tokens.
While this doesn’t directly have an effect on Bitcoin per se, the more attention digital currencies have, the more popular biggest cryptocurrency becomes. In return, more popularity means more investments, which of course, mean a higher price.
Based on these aspects, what are your thoughts on the factors behind Bitcoin’s unprecedented rally?
Last modified: May 21, 2020 9:08 AM UTC