- By Pierre-Alexandre
May 16th, 2019
A multitude of positive news around Bitcoin has contributed to its massive price rally in the recent weeks. Let’s us take a look at the crucial developments in-and-around Bitcoin.
- New 2019 Performance.
- U.S.-China Trade War Pushing Investors to Buy Bitcoin
- Institutional Demand for Bitcoin Is Rising
- Microsoft Announces Decentralized Identity Solution Ion on Bitcoin Blockchain
- Popular Retailers and Merchants Start Accepting Bitcoin
1. New 2019 Performance.
After a long-lasting crypto winter in 2018 and early Q1 of 2019, Bitcoin has now swept the crypto industry by storm.
Guys I hate to break it to you but the #bitcoin parabola is simply out of room.— Moon Overlord (@MoonOverlord) May 16, 2019
We're going to have to attempt a warp jump through space and time to continue this.
Target $20k+, February 2019. pic.twitter.com/Vt9ppMTDEU
BTC and alts pumping together.— The Crypto Monk ⛩ (@thecryptomonk) May 16, 2019
It feels like early 2017.
Since April 2019, the cryptocurrency has been on a massive price rally giving nearly 100% appreciation to its investors in just last 50 days.
Bitcoin (BTC) is now trading around $7900 with a market cap of $141 billion while dominating over 56.3% of the overall cryptocurrency market cap.
The world’s largest cryptocurrency has managed to beat all odds and events like Binance hack while swiftly moving northwards. However, there’s not one specific reason which can be attributed to this price rise.
A series of positive news flow over the last two months may have contributed to improving Bitcoin market sentiment and could also have facilitated the current rally.
Let’s have a look at all the plausible reasons behind this price surge:
2. U.S.-China Trade War Pushing Investors to Buy Bitcoin
The global economy is facing the threat of massive meltdown as the ongoing U.S.-China trade war further intensifies. Tensions between the two countries are escalating after U.S. President Donald Trump and his Chinese counterpart Xi Jinping failed to meet mutual consensus.
Global analysts predict that investors are now shifting their capital from the traditional stock market to the crypto market, especially Bitcoin. David Siemer, CEO of blockchain-focused investment firm Wave Financial, calls Bitcoin a “natural hedge” (Yahoo).
He says that crypto is a completely non-correlated asset to stock and hence remains a good alternative for investors.
Tom Lee, Co-founder of Fundstrat, told CNBC that the looming concern in the global economy is the reason investors are turning towards Bitcoin.
The Chinese Yuan is constantly losing its strength against the U.S. Dollar due to the increased tariffs on Chinese goods by the U.S. government.
Some analysts explain the current Bitcoin rally by the growing interest of Chinese investors for Bitcoin, who are liquidating their Yuan holdings and dumping them into Bitcoin (Forbes).
Note that despite China’s Bitcoin ban, investors can still purchase the cryptocurrency through over-the-counter dealers.
3. Institutional Demand for Bitcoin Is Rising
Traditional financial institutions are making efforts to launch their products and services in the market as institutional demand for Bitcoin is on a steep rise.
Grayscale Bitcoin Trust (GBTC), that exclusively looks after Bitcoin investment stated that 80% of the investments in 2018 came from institutional players.
The total assets under management (AUM) in GBTC’s Bitcoin-held fund have surged to a 10-month high of $1.42 billion on last Friday, May 10.
Financial giant Fidelity Investments is gearing up to launch its Bitcoin trading services specifically for institutional players in the coming weeks. Fidelity spokesperson Arlene Roberts appraised Bloomberg about this development saying that its crypto trading service will be based on client needs, jurisdictions, and other factors.
Besides, Fidelity recently published its research stating that crypto markets will continue to drive institutional investments in the next five years.
CME Group, the world’s largest derivatives marketplace, noted a 50% jump in the Bitcoin futures volumes on Monday. eToro’s senior analyst Mati Greenspan said that on Monday, Bitcoin futures on the CME Group attained its all-time high of 33,677 contracts on Monday.
Greenspan added: “Each contract is worth 5 coins, so that's an equivalent of 167,385 BTC. If we assume an average price of $7,500 per coin, that's a total volume of $1.26bn, the highest ever recorded by far.”
After several regulatory delays, ICE’s Bakkt platform has confirmed the launch of its Bitcoin futures by July 2019. Bake CEO Kelly Loeffler confirmed that Bakkt’s talks with the CFTC regulators are in the final stage.
4. Microsoft Announces Decentralized Identity Solution Ion on Bitcoin Blockchain
Tech giant Microsoft has developed a new decentralized system for digital identities to enhance security, privacy, and control. Dubbed as ION (Identity Overlay Network), the solution is an early preview of the Sidetree-based DID network that runs atop Bitcoin’s blockchain network.
Ultimately, even giants like Microsoft seem to have realised the true potential of the Bitcoin network for offering decentralized solutions.
Alex Simons, Microsoft’s Vice President of Program Management, writes that the new approach has helped them increase the throughput of DID systems manifold times. Introducing ION have helped they achieve tens-of-thousands of operations per second.
Besides, Simons also acknowledged that Bitcoin is the only relevant unit of value for the operation of the on-chain aspects of the ION network.
He further notes that the new ION Identity system is completely self-sovereign with users having absolute control over their personal data. It also provides seamless access to all applications in the digital world.
5. Popular Retailers and Merchants Start Accepting Bitcoin
On Monday, May 13, crypto exchange Gemini sealed a partnership with crypto payments startup Flexa to bring cryptocurrency spending to the mainstream. Some of the major global retailers like Whole Foods, Baskin Robbins, Nordstrom, Barnes & Noble, etc. have pledged their association to accept crypto payments at their outlets.
Using the SPEDN mobile wallet app powered by the Flexa blockchain network, customers can spend cryptocurrencies like Bitcoin, Ethereum, and Bitcoin Cash at all the partner outlets, Furthermore, the can also spend Gemini’s native stablecoin Gemini Dollar (GUSD) at these outlets.
Users can load their cryptocurrency in the SPEDN app’s mobile wallet as Gemini will offer the custodian security for it. This is a great step in bringing cryptocurrencies to the mainstream financial framework.
Gemini co-founder Tyler Winklevoss also explained some of the benefits of using the Flexa platform. Currently, retailers across the globe pay billions of dollars in processing costs. Flexa’s blockchain solution helps to reduce these costs considerably while additional benefits of fraud-resistant transactions.
Moreover, merchants can continue to use the existing payment hardware and receive the payment directly in fiat, and not crypto. ICE’s Bakkt has also partnered with retail giant Starbucks as the platform will offer similar crypto spending feature upon launch.
Our Bitcoin Sentscore is still oscillating around 7.4/10, close to the very positive sentiment zone. In green the Bitcoin Buzz indicator shows that there is still a high level of mentions and discussions about Bitcoin.
Our social sentiment score is still in the neutral zone as we detect that the crypto communities is excited by the rally but also debating a potential profit-taking pullback.