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Bitcoin prices have surged lately, breaking through $13,000 for the first time since January 2018 and nearing $14,000.
The world’s largest digital currency by market value reached $13,879.24 today, according to CoinDesk bitcoin price data.
At this point, the cryptocurrency was up 13.3% since the start of the day, additional CoinDesk figures show.
In addition, bitcoin had climbed more than 340% since its recent low of close to $3,000 in December.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
The digital currency has been on a tear lately, breaking through $10,000, $11,000 and $12,000 all in June.
As for why the cryptocurrency generated its latest gains, analysts pointed to several causal factors.
Erik Finman, a young entrepreneur who became a millionaire as a teenager, took this point of view.
“I believe that the fact that bitcoin hit $13k today is an example of several major elements finally coming together – there is not one particular thing that caused the increase,” he stated.
Influence Of Tether
More than one expert pointed to recent tether activity as a potential variable behind bitcoin’s sharp gains.
In the last 60 days, roughly $600 million worth of tether, which trades under the ticker symbol USDT, has been minted, according to Etherscan data.
Some market observers have pointed out that this influx of tether has coincided with significant increases in the price of bitcoin.
Marouane Garcon, managing director of crypto-to-crypto derivatives platform Amulet, weighed in this situation, emphasizing that “you can’t ignore the murmurs surrounding the USDT and Bitcoin correlation rumors.”
“It’s hard to prove, but I certainly wouldn’t dismiss it considering the historical evidence.”
Growing Awareness Of Bitcoin
Investors are becoming more familiar with bitcoin, which is likely contributing to its continued gains, several market observers emphasized.
“Bitcoin is more popular now and people are more familiar with it,” said Garcon.
“The growing acceptance of crypto has led experienced traders and other large investors who weren’t yet comfortable with crypto to enter the market,” stated Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital.
“We’re still feeling the effects of the upswing from the news of Facebook’s Libra project his last week, which went a long way to validate crypto amongst those who hadn’t yet bought in,” he added.
“Crypto remains a strong investment for institutions seeking additional diversification into an uncorrelated asset, global markets, and technology.”
FOMO
While the market’s optimism has helped bitcoin prices skyrocket, this sentiment may have become a little too strong, said Jeff Dorman, chief investment officer of asset manager Arca.
“During periods of normal market activity, there is typically an equal amount of fear, greed, and positive/negative price predictions,” he stated.
“But during the last few weeks and mostly the last few days, almost every single investor has expected this market to go higher, to the point where it has become a self-fulfilling prophecy.”
“Not only have people been right about the direction, but often right about the specific short-term price targets, which generally means that the market is focused more on taking out technical resistance levels than underlying fundamentals (for example, it was universally believed that as soon as BTC hit $10,000, BTC would immediately ascend towards $11,000 – and that took less than a day).”
He emphasized that the sentiment surrounding crypto can become overly bullish, providing cause for concern.
“When it becomes a forgone conclusion that crypto markets are going higher, and every taxi driver and grandmother is talking about it, it becomes a bit unsettling short-term,” said Dorman.
Over a longer time horizon, he is less worried.
“Our near-term hesitation does not at all take away from our long-term bullishness,” said Dorman.
“Those who can withstand high levels of volatility should rightfully ignore any near-term hiccups.”
Disclosure: I own some bitcoin, bitcoin cash and ether.
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