Bitcoin Exceeds The $8,000 Mark, Hits Highest Level Since July 2018
Bitcoin has demonstrated another performance of wild volatility in the past few days, gaining over $2,000 since the last Wednesday. As of Tuesday, May 14, Bitcoin was fluctuating at around $8,000, hitting the daily peak at $8,256, which is the highest level since July 2018. Thus, the largest cryptocurrency by market cap has more than doubled its value since the beginning of the year.
What Drives The Rally?
Interestingly, the bullish explosion comes despite the recent news discussing the Binance hack, which saw the largest cryptocurrency exchange losing about $40 million. The quotations have probably awakened on investors’ increased confidence that Bitcoin is an investment opportunity worthy of consideration. This is true especially amid the current trade tensions between the US and China, which have re-escalated after Trump announced a new tariff on imported goods. In this context, Bitcoin and other cryptocurrencies are seen as safe-haven assets against fiat currencies like the US dollar and euro, with the latter also suffering from Brexit uncertainties and slowing economic growth of the eurozone.
Elsewhere, we reported last week that the social media behemoth Facebook had eased its ban on crypto-related ads, which encouraged the community to become more open on the Internet. This might have supported the current bullish trend as well. It is very likely that Facebook relaxed its stance just before announcing its own cryptocurrency, but the truth is that the whole crypto market has reaped the benefits.
Some investors are turning to Bitcoin as the US stock markets are departing from the recent record highs.
Finally, the greatest catalyst behind such rallies is the fear of missing out (FOMO), with crypto investors jumping in the uptrend to generate a profit from the short-term move.
Is Bitcoin Price Manipulated?
Some analysts are not convinced that the forces behind the bullish trend are natural, suggesting that the Bitcoin price might be manipulated.
John Griffin, finance professor at the University of Texas at Austin, worked with a group of experts who discovered price manipulations behind the Bitcoin rally in 2017. He hinted that the current move might be pushed by similar activities:
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.
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.
Tim Massad, former chairman of the US Commodity Futures Trading Commission (CFTC), has shared similar opinions, saying that no-one really knew what was driving the quotations.
The former CFTC executive said:
But you worry that manipulation could be a contributing factor given the lack of regulation and transparency in this market compared to other markets.
On a side note, the CFTC is the main regulator in the US that keeps an eye on Bitcoin-related products, treating it as a commodity.
Reactions of Crypto Influencers
The crypto community has become even nosier after Bitcoin updated its highest level since the start of the year. However, John McAfee, the man behind the anti-virus software with the same name, has warned that Bitcoin holders shouldn’t go crazy about the wild fluctuations. The eccentric crypto leader advised that the best way to avoid the emotions of the volatility was to stop checking the prices every second. Instead, “just check the price once every two or three months,” he said via his Twitter account. He is still is a big believed in Bitcoin and expects the price to hit the one million market some day.
Elsewhere, Bitcoin bull Tom Lee, head of research at Fundstrat Global Advisors, said that the Consensus Week in New York, probably the largest blockchain and crypto event of the year, would decide the future trends of the market. He said on CNBC’s “Futures Now”:
It’s the largest crypto conference. I think that, really, this year is bringing the crypto industry together, but in a much more higher-quality form because you don’t have as many sort of scams and ICOs out there.
Lee hopes that the Consensus Week will go well. The event will gather industry experts and top executives, like Jack Dorsey of Twitter and Square, and government officials like Jay Clayton, who’s the chairman of the Securities and Exchange Commission (SEC).
Lee noted that Bitcoin was crossing its 200-day moving average from bottom to top and that the price was closing to the $10,000 mark, which is encouraging for institutional investors.
I think what’s getting investors quite optimistic is that now that bitcoin is approaching that $10,000 level, I think that there’s an increasing chance that traditional, non-crypto investors, traditional financial investors, are going to start to look at crypto again. And that’s very important, obviously, because bringing in that new sort of interest and demand into crypto could really push bitcoin to its all-time high.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.