Good News or Better News: Bitcoin is Making a Move
By: Chris Douthit
Tags: Blockchain, Finance, Technology, Bitcoin, Investing

Suddenly, Bitcoin is up to almost $7800, and now everyone is wanting to get back on the train hoping that it will continue to chug up that mountain and return cryptocurrency to some of its former glory that faded away soon after the first of the year.

There has been speculation (depending on who you’re listening to) for weeks that cryptocurrency would spike again soon with some saying that Bitcoin would hit crazy high numbers by the end of the year, but the waters have been relatively calm and depressing until this bit of positive activity. So, what made the market jump, and is this the beginning of the price hikes some have predicted?

The overall market cap hit $295 billion on July 18th and has stayed in a this trading range over the last few days. Since Bitcoin is the largest cryptocurrency by the market cap, when it rises the other alt-coins follow.

This was a fairly significant event, and some might wonder what changed to cause this price spike. According to Forbes, the new CEO of Goldman/Sachs is friendly towards cryptocurrency and will be in full control of their new trading desk by October. Speculators are betting that this will help to shift more institutional money into the space. On top of that, Blackrock might of played a big part, and its $6.3 trillion fund is interested in starting a cryptocurrency “task force.”

This combined with the positive news coming from the SEC saying that the interest in having a Bitcoin ETF is higher now than it was in January, and hope is high that the SEC will approve of one soon. This is exciting because it will expose players from the traditional markets to cryptocurrency, and time will tell if that will bring about the positive results everyone is hoping for. But does this explain the sudden jump in price?

Considering that this recent increase happened over a short period, one has to think there was more to it than just these positive speculations alone that drove the price up so high. Some feel that this hike is connected to the liquidation of “shorts.”

Shorts are positions where the traders bet the price of cryptocurrency will go down. These type of players are betting against the crypto market, and in most cases, leveraging money, as in borrowing funds to make their bet. This forces traders to buy back the short position when the market goes up for current market value, which in turn drives the price even higher.

This would explain the recent vertical line on the charts. But will this trend continue upward? One might speculate, should this explanation be the true cause for the radical spike, that the price increase doesn’t have what it takes to be sustained. That, however, is for the investor to decide. One thing is for sure, if you had a substantial investment in Bitcoin on the 16th you were certainly a happy camper by the 18th. Bitcoins gains are always made on just a few days out of the year, so it’s important to have a position when that spike happens.

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