Bitcoin is back from the brink. Sort of.
After topping at near $20,000 in mid-December, the world’s leading cryptocurrency by market cap has been in nothing but freefall ever since. But over the last week, Bitcoin has moved closer to $10,000, cracking $9,000 in mid-morning trading on Tuesday. What’s happening with this crazy coin now? The quick answer: big investors and tech upgrades.
“Bitcoin is trading upwards for a number of reasons,” says Fran Strajnar, CEO of Brave New Coin, a data and research company focused on the blockchain and cryptographic assets market. Strajnar thinks the fundamentals of Bitcoin have improved. Recent improvements to its lightning network and outside forces from regulators are both bringing investors back. “The U.S. is stepping in to regulate security tokens instead of commodity assets (utility) and we are seeing major value investors stepping into buy as a result,” he says. Security tokens are cryptocurrencies issued by startups similar to shares, while utility tokens are like coupons used for a specific service the issuer offers. Both are tradable on an exchange.
“As the Soros’ and the Rockefellers’ of the world move into this ecosystem, this asset class is legitimized and trending in an extremely positive direction,” Stajnar says, adding that the odds of a Bitcoin ETF getting approved by the Securities and Exchange Commission have improved.
George Soros’ $26 billion wealth management firm is planning to trade digital assets. Adam Fisher, who oversees macro investing at New York-based Soros Fund Management, told Bloomberg this month the fund is approved to trade in crypto.
Venrock, a venture capital firm associated with the Rockefeller family’s personal wealth fund, is also getting in on the act. They partnered with CoinFund, a crypto assets hedge fund run by Alex Felix in New York. They are investing in startups that also issue their own coins, CoinFund said on April 6.
“Word is getting out that traditional financial industry players are preparing to enter the crypto trading markets soon,” says Eiland Glover, CEO of Kowala, a blockchain platform with its own cryptocurrency.
Blockchain ETF firm RealityShares in San Diego is working on their own cryptocurrency exchange.
Some 56 finance firms are said to be standing by ready to enter the crypto markets by the end of the third quarter.
“The entrance (of new financial firms) promises to provide much higher levels of liquidity along with a tsunami of new money…driving today’s prices higher,” Kowala’s CEO and co-founder says.
Moreover, India may be back peddling on Bitcoin. Following the Reserve Bank of India’s ban on Bitcoin this month, Indian cryptocurrency startups have sued. China still has crackdowns on initial coin offerings and mainland cryptocurrency exchanges but remains a tier 1 hub for blockchain technology. China money is going offshore into Hong Kong and Singapore and finding its way into crypto assets, from venture capital-like investments in startups to direct investments into coins listed on exchanges.
“This 50-day high is a solid indicator that people are slowly re-entering the market,” says Rob Viglione, co-founder of ZenCash. “Increased regulatory scrutiny globally has weighed down on crypto prices over the last quarter, but the space has remained relatively stable over the last several weeks. People are starting to gain a more nuanced understanding of the long-term potential of blockchain technology,” Viglione says. “It also helps that major investors are becoming more bullish…that bolsters the confidence of the retail investor.”
The top 10 traded coins are all up as of late Tuesday morning. The EOS coin is the biggest gainer so far, up more than 13%. The coin trades at just $13.50 compared to around $9,000 for one Bitcoin. EOS is a Hong Kong-based software company developing solutions for blockchain platforms.