Amazing movement Bitcoin in recent weeks, traders have undoubtedly taken traders by surprise.
Below is a tweet from Joseph Young , a leading cryptocurrency analyst / journalist who noted that BTC short sellers saw millions of dollars of their positions liquidated during this move, emphasizing how unexpected this move was.
This is exactly how Tesla went from $ 409 to $ 968.
Ironically, short sellers continue to provide extra fuel to its momentum. As price rose, it forced traders to readjust, basically market buy, and create buying demand.
We're seeming a similar trend with bitcoin. pic.twitter.com/LMlmu2kpE2
- Joseph Young (@iamjosephyoung) February 11, 2020
This leaves an urgent issue.
Why is Bitcoin moving so high?
Vijay Ayyar, head of business development at cryptocurrency exchange Luno, weighed in on the recent rally in digital asset markets in an interview with CNBC, citing key factors that are likely behind the rise in demand for bitcoin and, as a result, altcoins.
The first factor he cited was fears surrounding the outbreak of coronavirus, which caused some uncertainty in world markets. A new coronavirus has begun to spread in China, which reportedly has a high transmission rate and a relatively high mortality rate compared to the common cold, which has led many companies (both Chinese and international) to face their supply chains suffered, causing damage to the markets.
Bitcoin is supposedly involved because people see cryptocurrency as a “safe investment” or “digital gold,” which can actually benefit from chaos rather than suffering.
The second factor that Aiyar touched upon was the recent comments by Jerome Powell of the Federal Reserve regarding the importance of digital currency in today's world.
At a congressional committee hearing on Tuesday, Powell said the launch of Facebook's cryptocurrency, Libra, “lit a fire” in the rear of governments and central banks in the world, including the Fed. This would seem to confirm that cryptocurrency has value in the modern world.
Other factors in the game
Although these two factors have gained great popularity as a likely bullish catalyst, there are other factors that may affect how investors direct capital to cryptocurrency markets.
Namely, the upcoming halving or “halving” is a reduction in the block reward, after which the inflation rate in bitcoins will be halved due to the code built into the blockchain.
Prior to the historical cuts that occur every four years, Bitcoin has grown strongly, and then fell slightly after the event due to mining factors; this is relevant because the current rally may be similar to the previous rally that preceded the halving.