It has been 413 days since Bitcoin was above $10,000. For crypto enthusiasts, days have felt like years and to finally reach the 10K psychological level is a huge accomplishment for many.
Weekly price action has increased sharply since March. In fact, from the 1st of January to date, Bitcoin has gained 153%, outperforming many financial assets such as the S&P, NASDAQ and the DAX. In May, BTCUSD gained over 62%, being one of the most profitable months since 2017 bull run. BTC Index has recovered a significant amount of its losses from last years bloodbath, with bulls confident that there is more room for growth. Bitcoin is currently 86% away from its Dec 17th 2017 all-time high of $20,087,
How do we get to $10,000 so quickly?
There are many reasons that have contributed to the rise in the price of Bitcoin, the most important one is certainly the speed of adoption. Both diffusion and adoption are rising faster than expected. As stated in our article called: “Case study: The rate of technological adoption”, 1⁄4 of the biggest companies in the world are adapting chain of blocks in their corporate structures, with many experts forecasting that by 2020 half of the market giants will make full use.
As expressed before, institutional adoption has been a key part of the current bull run. During 2019, the SEC has opened the door to many crypto investment vehicles, with a few interesting offers still waiting to be accepted (such as crypto ETFs, that have been delayed since May). In addition, The Securities and Exchange Commission has started to provide guidelines for a tokenisation movement as well as the IRS working on new guidance for cryptocurrency investors. Last month the American tax collector announced that they are finally making some changes to the old 2014 cryptocurrency guidance, as mentioned in our recent article.
Institutional adoption has been lead by financial gains such as Fidelity, which has officially expressed that they will be opening a trading platform as well as crypto storage services. Under the slogan “Fidelity Digital Assets is leading the future of financial services” the firm has dragged many of its users and biggest investors to the crypto space.
In addition, on July 22 the crypto community will experience the launching of Bakkt’s futures. The startup registered under the New York Stock Exchange. On the 13th of May, they disclosed more details about the crypto-platform by tweeting:
“We’ve worked closely with the CFTC to develop contracts that both meet our customers’ needs for trading, transparency, and market certainty, and are also compliant with Federal regulations”
Grayscale Investments has also been an important player in the status quo of the crypto market. The global leader in digital currency asset management is developing units of fractional undivided beneficial interest inside the Grayscale Ethereum Trust (“ETHE”) and they are closely working with FINRA for further adoption and eligibility. Grayscale gained a lot of popularity after BTC was traded with a 37% premium a couple of weeks ago.
Facebook’s recent announcement of their cryptocurrency: Libra has placed the entire space right in the media spotlight. The coin will be backed by real assets such as the strongest global currencies and government debt, and will have strong companies behind such as Mastercard, Vodafone, Visa and Paypal. Users will avoid volatility by using the digital asset and will be applicable to several uses, according to the American giant. Facebook has also created a secondary company called Calibra, that will be in charge of managing the coin as well as offering digital wallets in the future.
The current bullish momentum has also been occasioned by many national legislations taking more steps to include cryptocurrencies in the banking system. Many legal frameworks are also being amended to give the crypto space more flexibility. Japan, Germany, Singapore, Hong Kong, Switzerland and Malta are leading the way. The openness of these nations has attracted numerous crypto startups in recent months, allowing them to develop more useful services. Giants such as Binance has said goodbye to the US market, and now it’s looking to expand its headquarters to Japan and Malta.
Lastly but not least, the current political and economic uncertainty dominating the markets are stoking the bullish sentiment. The dovish policies adopted by many central banks around the world are certainly sending BTC to new levels. The latest FED dovish tone for 2019 and 2020 appears to have impacted the crypto market, with investors now looking for better yields on more risky assets. A few days ago, we covered the topic of market uncertainty in an article, which stated the following:
“The crypto space has won the reputation of being a safe-haven asset against the current trade war and a possible recession in 2020. As the crypto market is still uncorrelated with other financial assets, investors and fund managers are taking this as the perfect option to diversify their portfolios and hedge against economic downturns” – Cryptonary.
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