Digital Currency
After weeks of relative quiet, Bitcoin has once again captured investors' attention.
According to CoinMarketCap data, around 2 PM Eastern Time on the 17th, Bitcoin's price suddenly skyrocketed, breaking through six key resistance levels in quick succession: $6,800, $6,900, $7,000, $7,100, $7,200, and $7,300.
In less than an hour, Bitcoin surged by approximately $600, adding around $9 billion to its market capitalization.
The rally continued into the next day, with Bitcoin surpassing the $7,500 mark—reaching its highest point since June 9. However, by 6 PM Eastern Time on the 18th, Bitcoin had retraced slightly, settling at $7,338.
While Bitcoin has previously recorded gains of over $4,000 within 48 hours, this recent uptick, though modest, has reignited investor interest.
What Drove the Price Increase?
A timeless investment adage states: "Markets are born in despair, grow amid skepticism, mature with optimism, and collapse in euphoria."
Since peaking at $20,000 in late 2017, Bitcoin has significantly depreciated, losing nearly 60% of its value by June 2018. Yet, it seems far from a state of collapse.
Bloomberg reported that cryptocurrency exchange Coinbase announced on the 17th its approval by the U.S. SEC and FINRA to acquire several securities firms. These acquisitions will enable Coinbase to offer cryptocurrency securities under federal oversight. Analysts suggest this news injected optimism into a previously bearish market, which had faced regulatory crackdowns due to theft, market manipulation, and money laundering concerns.
Additionally, the Financial Stability Board (FSB) alleviated some uncertainty around cryptocurrencies. On the 16th, the FSB submitted a report to G20 finance ministers and central bank governors, stating that cryptocurrencies "currently do not pose a material risk to global financial stability." However, the FSB emphasized the need for vigilant monitoring due to the market's rapid evolution.
Beyond regulatory developments, mainstream financial institutions' growing interest in Bitcoin has also fueled its price rise. CNBC reported that BlackRock, the $6 trillion asset management giant, recently confirmed forming a working group to explore cryptocurrency markets and blockchain technology.
Meanwhile, Goldman Sachs' leadership transition drew attention. On the 17th, Goldman announced that 63-year-old Lloyd Blankfein would step down as Chairman and CEO, with David Solomon taking over. Solomon has previously expressed intentions to expand Goldman’s Bitcoin and cryptocurrency services.
Matthew Newton, an eToro market analyst, noted: "This week brought a wave of positive news, including validation from the FSB and institutional investors like BlackRock. After weeks of stagnation, such developments lend credibility to cryptocurrencies as a viable long-term asset class."
However, some experts argue the rally stems more from technical factors than external catalysts. Mark Newton of Newton Advisors observed that recent technical patterns suggest Bitcoin could climb further to $8,000, "with no concrete news to explain the movement."
Will Bitcoin Continue to Rise?
Despite bullish signals, challenges persist.
Bloomberg reported that Coinbase clarified it had not received explicit approval from U.S. regulators. An SEC spokesperson also denied granting Coinbase formal permission.
Federal Reserve Chairman Jerome Powell further dampened sentiment. During a Wednesday address, Powell reiterated the Fed’s lack of regulatory authority over digital currencies, stating they lack intrinsic value and typical monetary traits, thus failing as currencies. He warned of risks like money laundering, tax evasion, and terrorism financing, while noting their volatility undermines their utility as stores of value.
Kenneth Griffin, Citadel’s CEO, echoed skepticism: "Not one of my fund managers has recommended cryptocurrencies. We’ve debated market-making for digital assets, but I struggle to support a product I don’t believe in." Griffin advised against Bitcoin investments for young investors.
Contrastingly, billionaire Marc Lasry remains bullish. Lasry told CNBC Bitcoin could reach $40,000 as trading accessibility improves, projecting 5x–10x returns for investors within 3–5 years.
Barry Silbert of Digital Currency Group shared optimism: "We may have hit bottom. Last week, I invested more in Bitcoin. It’s an enduring asset class."
The St. Louis Fed also offered a favorable outlook, releasing a report comparing Bitcoin to cash and welcoming "anonymous cryptocurrencies." Notably, the San Francisco Fed once estimated Bitcoin’s intrinsic value at $1,800—aligning with mining costs—far more optimistic than Powell’s dismissal.
Currently trading near $7,500, Bitcoin’s outlook remains cautiously hopeful.
FAQ
Q: What caused Bitcoin’s sudden price surge?
A: Factors include regulatory approvals (e.g., Coinbase acquisitions), institutional interest (e.g., BlackRock’s exploration), and technical trading patterns.
Q: Is Bitcoin a safe investment now?
A: Volatility and regulatory uncertainty persist. While some experts predict growth, others warn of risks like price manipulation and lack of intrinsic value.
Q: Could Bitcoin reach $40,000?
A: Billionaire Marc Lasry speculates it’s possible with improved liquidity, though such projections remain highly speculative.