Following seven weeks of consistent gains, Bitcoin’s value has surged by more than $1000 over the last 24 hours, taking its exchange price back above $8000 for the first time in 10 months. After a year in a half in the doldrums following the bursting of the 2017 Bitcoin bubble after the cryptocurrency’s value hit a giddy $20,000, the question is now being asked ‘are Bitcoin and cryptocurrencies back? Will there be breakthrough into mainstream financial systems this time or is the recent Bitcoin price resurgence just another bubble?
As recently as mid-March, Bitcoin’s price was hovering around the $4000 level, from where two months later it has roughly doubled. But what, if anything tangible, is behind the resurgence and is it sustainable?
There’s no obvious single big trigger for Bitcoin’s recent gains. Rather, cryptocurrency market insiders and observers are putting it down to the combination of a new wave of positive news. It is thought the Consensus 2019 bitcoin conference due to take place in New York this week may have sparked interest. But it seems far-fetched to suppose an industry event would be such a major influence.
Another theory that seems highly doubtful is that investors are moving into Bitcoin as a ‘safe haven’ from the negative impact U.S.-China trade tensions are having on traditional financial markets. But given its history of boom and bust volatility, how many stock market investors would really see Bitcoin as a calm port to wait out a possible Wall Street storm?
A slightly more plausible factor could be that holders of other cryptocurrencies, from ICO tokens to the myriad of ‘Altcoins’ are selling off and moving funds raised into Bitcoin. But why suddenly now when the ICO and Altcoin market has been flailing for well over a year? An anticipated collapse of ‘Tether’, the fiat currency-pegged ‘stable coin’ many, including New York Attorney General Letitia James, suspect of being held up by ‘ongoing’ fraud conducted by the owners of Bitfinex, the cryptocurrency exchange behind it, could be part of the answer. There has been speculation that Tether owners are currently, en masse, getting out of the cryptocurrency and into Bitcoin before it’s too late.
Finally, and perhaps most likely, has been a run of news around institutional investors and traditional financial services companies moving into the cryptocurrency sector. A little over a week ago Bloomberg reported that Fidelity Investments, one of the world’s biggest financial services companies, is preparing to open an institutional clients-facing crypto trading desk within weeks. A few weeks earlier Fidelity had published results from a survey to which 47% of institutional investor respondents had said they believed crypto-assets such as Bitcoin are ‘worth investing in’.
Evidence of more institutional involvement coming into the cryptocurrency space could well be seeing a wave or private and institutional investors move to hedge their bets again by buying Bitcoin. But for now it’s a case of ‘wait and see’ if the trend that has now entered official ‘bull market’ territory for Bitcoin can continue. And where, if anywhere, it might lead this time.
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