Bitcoin Surges to Highest Price in 10 Months
Don’t count Bitcoin out just yet. After a rough patch that saw the cryptocurrency falling through each perceived price floor and continued regulatory concerns, BTC has staged an impressive rally in recent days, topping $8,000 at times. As CNN Business notes, this is the highest level the asset has reached since last July. So what’s behind the bullish run?
One potential explanation lies in the struggles seen on the stock market. These dips are most directly the result of an escalation in the U.S.-China trade war. Supporting this theory is the fact that Bitcoin increased its value by nearly $1,000 on Monday as the Dow Jones Industrial Average fell by more than 600 points. Interchange co-founder Dan Held explained this phenomenon, stating, “It’s bitcoin’s moment to shine when people momentarily give up on the government or the banking system.”
Of course correlation is not causation and Bitcoin has remained at its high levels even as the stock indices rebound. The problem is that there are fears that this latest rise could be the work of manipulation more than market demand. Among those who have doubts about this rally is University of Texas at Austin finance professor John Griffin who told CNN Business, “Manipulation could very well be behind the recent market moves. To act like bitcoin and cryptocurrency prices are purely driven by supply and demand of little traders … ignores the specific mechanics of this marketplace.” Griffin added, “It would not be a stretch nor surprising to find that manipulative activity is behind the recent runup when the underlying market mechanics are similar to before.” What’s more Griffin isn’t alone in his concerns. Former US Commodity Futures Trading Commission chairman Tim Massad said of the rally, “[Y]ou worry that manipulation could be a contributing factor given the lack of regulation and transparency in this market compared to other markets.”
Given those sentiments, there is always the possibility that what seems like good news for Bitcoin now could later be cited as a negative. Take for example the asset’s famous run up to a $20,000 price, only to crumble in the weeks after. This trajectory is one that those in favor of attempting to regulate cryptocurrencies often point to when laying out their case, giving this rally the potential to become a sequel of sorts if things take a turn for the worse once again. On the other hand, perhaps this sudden rush to Bitcoin is legitimate and could be a signal that cryptocurrencies and blockchain are inching closer to mainstream success. Ultimately only time will tell.