Last two days have been significant for Bitcoin and entire cryptocurrency market. The much-awaited bull run seems to have begun as Bitcoin breached through $8,000 for the first time since September last year, breaking many important resistance levels in a single day. It’s still trading at $8,050 as I’m writing this article, and this has happened after a jump of more than $1,000 within 2 days. What might have contributed to this rally? Which are the factors that might have played the role of catalysts for this bull run? In this article we’ll try to find an answer to these questions by looking at the 7 possible factors that might have led to this ongoing rally in the prices of Bitcoin and other cryptocurrencies. Let’s get started:
#1. Tether saga
New York Attorney General’s spat with Tether and Bitfinex was an important tipping point for cryptocurrency market. It once again placed Tether at the center of a massive controversy, which might have caused people to start liquidating their Tether positions and converting them to Bitcoin. But on the other hand, Tether’s ability to maintain its dollar-peg despite the spat with NYAG might also have caused its hardcore believers to believe even more in its reliability as a stablecoin. And since Tether is the dominant stablecoin in crypto market, any development that increases its reliability also affects the entire crypto market in a positive manner. We can’t say which of these factors played out more heavily, but Tether saga might certainly have played a role in the ongoing bull-run.
#2. Increased trading in certain markets (including India)
LocalBitcoins data suggests that over the course of last few weeks the crypto trading volumes of certain countries have been rising steadily. Countries like Singapore, United States and our very own India are witnessing a steady rise in Bitcoin volumes since last 3-4 weeks. Especially in Singapore the Bitcoin trading volume doubled within the last week from 346,000 SGD to 796,000 SGD. In USA there was a surge from $6.1 million to $7.8 million. And in India too the volumes surged over the course of last 4 weeks from 9 crore INR to 13.5 crore INR. Keep in mind that all these volumes are weekly volumes.
And if you who think that Indian volumes don’t matter much for the crypto market due to adverse regulatory conditions, think again. India is still the 4th largest trader of Bitcoins on LocalBitcoins. After United States, UK, and Europe it’s India which contributes the 4th highest trading volume to LocalBitcoins ($1.9 million). So Indian volumes definitely matter in the global cryptocurrency market.
Now, the reasons behind increased trading volume in all these markets may vary, but collectively they might have contributed to the bull run that we’re seeing in the market.
#3. Bitcoin’s next block reward halving event
The next Bitcoin block halving event is scheduled for 23rd of May, which is not too far now. The countdown has begun, and as its name suggests, after the event Bitcoin’s block mining reward will be half of what it today is. A lower block mining reward decreases the pace of new Bitcoin generation, while the demand is increasing with every passing day. Therefore, the demand for Bitcoins is usually increased before any block reward halving event, thus pushing the price towards the higher side. Same thing may be going on here too.
#4. Fidelity’s entry
If you visit Crypto-News India regularly then you may know already that a few days ago Fidelity Investments, one of the largest asset management firms in United States, announced that it will buy and sell crypto assets for its institutional clients. Fidelity’s entry to crypto market with an institutional angle might also have contributed to the bull run that we’re seeing in the market.
#5. Biggest brokerages in US entering crypto space
Fidelity is not the only American player from traditional finance field to enter cryptocurrency space. Towards the end of last month two of the largest brokerages in United States, namely E*Trade and TD Ameritrade, also announced that they will allow crypto trading on their respective platforms. The entry of these two brokerages in the crypto space can also make other major brokerages enter in this field, and therefore this reason might also have played as a catalyst for the bull run.
#6. Diar report
On 6th of May a market analysis report had been published by crypto analytics firm Diar. The report came with a number of positive details. It said that Ethereum’s on-chain transaction volume in April was at a record high, and Bitcoin on-chain transaction volume was also near its all-time high of December 2017. A day after this report was published, Ethereum surged as much as 9%. Bitcoin also rose more than 5%. And that’s where things might have started moving further in the right direction.
#7. Steady stream of articles and FOMO building up due to them
Bitcoin is surging ever since the beginning of this year. There were minor hiccups in between, but for a majority of time there has been a surge in the price of Bitcoin. And as Bitcoin’s price was rising, a number of online magazines and media channels started suggesting that now is the right time to invest in Bitcoin. That might have generated Fear of Missing Out, or FOMO as it’s known, and in turn all the buying prompted by it might have led to the rise in the price of Bitcoin.
So according to me these are the 7 reasons that might have contributed to the bull run that we’re seeing in the cryptocurrency market. And as you can see, the US-China trade war is not a reason behind the current rise according to me. It’s possible that it might also have played a role, but I don’t think so because usually in such conditions fund managers park their money in gold. Suggesting that they might have chosen Bitcoin over Gold to park their money is expecting too much from them, which I don’t want to do. There may also be some other reasons as well, but I don’t know about them. If you know, feel free to share them in the comments.