After several months reeling in a skeptical market, the cryptocurrency boom is back. Two factors have come together to drive this new rally of digital currencies: an upward perception of the market and the daily news giving a positive account of its acceptance.
Bitcoin broke the $50,000 barrier on Monday for the first time since May lows, while the price of other cryptos such as Cardano ADA, Ethereum, Dogecoin and IDA rose favorably as well. This occurred while the cases of infections with the delta variant of COVID-19 continued to increase in the United States. As a result, the schedule for the normalization of the Federal Reserve’s interest rate policy could be altered. If so, Bitcoin could respond favorably.
It all depends on the speech that will be delivered by Federal Reserve Chairman Jerome Powell at the Jackson Hole conference on Friday; so believes Oanda analyst Edward Moya.
The event will be scrutinized by investors for clues as to when and how Fed purchases of treasuries will begin to slow.
Were BTC Crash Forecasts Wrong?
Many were wrong in predicting that Bitcoin would plummet to record lows. After the coin hit lows of $29,800 in May. Analysis was based on the high volatility and speculation that cryptocurrency has displayed historically.
Rather, the general sentiment in the markets seems to be that Bitcoin will continue to rise. With BTC entering the big leagues of US finance thanks to the Senate Infrastructure Bill, support from fintech like PayPal (NASDAQ:PYPL) and some banks, along with the insurance giants, the horizon looks clearer.
As a result of recent repression by the Chinese government, miners are thinking of moving to the United States. The country offers better conditions for mining from a legal and energy point of view.
The Head of Institutional and OTC Sales at FTX, Jonathan Cheesman, commented to Bloomberg on Monday: “There has been an accelerating fund of crypto asset accumulation in recent months.” He added: “Institutional flows in Bitcoin and Ether, as well as a lot of retail activity in NFT and gaming are likely to contribute.”
In a tweet from his personal account Cheesman wrote on Sunday 22nd, “What he should know, is being long bitcoin is the best way to short financial assets. Extreme central bank easing is driving bitcoin adoption”. Cheesman was referring to hedge fund manager Michael Burry’s long-term bet on the Treasury sinking.
What Is Coming?
Whenever there is a rise in crypto prices, confidence returns to the market; especially when the whales sing and announce massive purchases. However, the rise could be just one more manipulation to which we are growing accustomed.
How similar is the current scenario to the Elon Musk saga, who saw in Bitcoin an opportunity to cover Tesla’s losses? BTC prices skyrocketed to $64,000 in mid-April. After Tesla (NASDAQ:TSLA) dumped its crypto assets at the end of March, it made a huge profit of $272 million (59%).
Musk’s subsequent comments against mining and its environmental impact caused BTC to lose about 25% of its value in a week. However, since late July the Tesla CEO has been making comments that appear to support Bitcoin.
Musk has stated that he personally owns assets in various cryptocurrencies (Bitcoin, Ethereum, and Dogecoin) and that he wants crypto to succeed.
Another influential figure in the market, Cathie Wood, founder, CEO and CIO of Ark Invest, also forecasts good times for cryptocurrency.
Speaking to Bloomberg TV, the investor predicted that Bitcoin will hit $500,000. She even encouraged corporations to consider adding BTC to their balance sheets.
Experts have drawn attention to the signals of the hash rate (unit of measurement of the processing power of the Bitcoin network) during the last month. The BTC ban and strong Chinese crackdown on mining affected this rate by shutting down millions of dedicated computers. About 65% of BTC mining was done in China before the ban.
On The Flipside
Why You Should Care?
The recovery of Bitcoin and other digital currencies has helped restore confidence in the cryptocurrency industry and market despite the growing wave of regulations that digital money will have to face around the world in the near future. Meanwhile, everyone who interacts in the cryptocurrency market: Stock exchanges, brokerage houses, banks and even financial institutions, have been preparing for the imminent expansion of the cryptocurrency market and attending to the demand.
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Source: Cryptocurrency - investing.com
