Here Come The Possible Answers On Why Bitcoin’s Price Is Rising

The Current Scenario In Bitcoin Price Surge

First questions, first. The reason behind the current run-up in the price of bitcoin is being keenly watched. For which many people want a definitive answer, that is a question. One unifying theory is tough to come by so far. 

It was observed that by mid-October the price of bitcoin then shot up from the $11,000 range to the cusp of around $19,000 as that is what we do know. In this context we observe Bitcoin’s market cap to be recently set with a record by breaking above $345 billion and since there comes a mega-rally in 2017, more bitcoin has been mined and put into circulation while these prices are a few hundred dollars shy of its all-time high. 

The Case For Demand: New Money

If not outright embracing it, there seems not a day wherein it goes by without some story of a major financial institution warming up to bitcoin.

It could take the place of gold to a large extent as a CIO at BlackRock was saying. By the end of 2021, an analyst at Citi was saying bitcoin could reach $318,000. When institutions claim to be buying that at the three times the amount as they were in the previous quarter, is a report from JPMorgan. 

Even Antarctica, the world is in the midst of a pandemic that is wreaking economic turmoil on every continent. Funnily enough, Hewlett Packard’s stock is up 3% year to date as central banks are printing fiat currency as fast as they can. Thereby throwing trillions of dollars, euros, and anything else they can borrow in an effort to stave off an economic calamity that would then lead to social unrest and violence in the streets or more of it as governments are also in on the act. 

Bitcoin Addresses Holding At Least 1,000 BTC Vs. Bitcoin Price

There is the data then. In a recent piece called four ways the current rally is different from the one of 2017, is CoinDesk’s Galen Moore spelling it out. Unlike three years ago they have been growing in number with higher prices as more whale accounts are holding 1000 or more bitcoin than ever before. Whereas in 2017, ether’s record prices were in the rear-view mirror for months after bitcoin was going higher, bitcoin and its closest rival ether are making recent highs together. With the CME daily futures trading volume hitting north of $1 billion several days the past few months as regulated markets are part of the mix this time around. To satiate the growing appetites of their counterparts in North America, since the start of 2020 some 200,000 bitcoin have been sold by investors in East Asia. 

It is here that preliminary data on the three vaccines for COVID-19 has shown an efficacy rate of 90% or higher after all. It may be soon gone when it comes to the very physical threat that loomed over workplaces and every aspect of everyone’s life. 

The Case For Supply: Bottled-Up Bitcoin

They focus on the demand side of the explanation is part of what makes the narrative to the current run-up seem so attractive. Supply is the other side of the equation yet, as we all know. Spurred by economic worries and egged on by analysts is there enough bitcoin to slake the thirst of all those new buyers who have entered the market? 

Supply was a big topic among those who talk about crypto, months ago. Whereby rewards given for successfully mining a block were cut in half as bitcoin was undergoing a halving. As there were going to be 900 fewer new bitcoins added to supply every day but there are new buyers added every day that would automatically lead to a surge in prices went the theory. 

A government crackdown is taking its toll on some of the crypto exchanges that cater to the country’s miners and traders, getting back to what else we know as one thing to add to that list is that in Chia site of the lion’s share of bitcoin’s hash power. Rather than trying to stamp out money laundering, the crackdown isn’t necessarily about halting crypto. Suspected in the mix, it just so happens crypto exchanges are possible. Having been getting the third degrees was thus executives at exchanges. 

Outflows Of Bitcoin From OKEx Vs. Bitcoin Price

Here what was the date on which all this started? October 16. Where it had bounced around since July, that happens to be a couple of days before the price broke out of the trading range between $10,000 and $12,000. 

That doesn’t mean one can’t trade on it as then again just because one can’t withdraw bitcoin from OKEx. Open interest on the futures contracts is at $1.22 billion according to Skew in fact. For any exchange, that is the biggest open interest figure. $200 million smaller is the CME, for instance. 

Bitcoin Futures Open Interest By Exchange

Its price is in line with those of its rivals while bitcoin can neither flow into or out of OKEx. 

To unload their newly minted bitcoin, miners are finding other venues. According to data from Chainalysis, Huobi, Binance, and other exchanges seem to be picking up the slack. Due to the money laundering crackdown, unfortunately, it hasn’t been Robinhood-easy for some miners to then convert their crypto into fiat. 

Stay Tuned

Not mutually exclusive are the two explanations for bitcoin’s bull run discussed above with the new demand and bottled-up supply. As OKEx is expected to allow withdrawals by Friday of this week, soon at least one of them will be put to the test. 

The case will be that as we are likely to know it by the end of the week. We will then be able to be figuring out if this is a demand-driven or a supply-driven market when we do. If it was really about there being more buyers or in case it was truly about there being fewer sellers for bitcoin that is.