Bitcoin price continues to soar, approaching 3,000, what do you think?

Bitcoin has continued to grow over the past seven weeks, its longest streak since 2013.

The day before yesterday, Bloomberg reported that Gil Luria, an analyst at Wedbush Securities, predicted that Bitcoin will reach $400 in the next 12 months. However, as of press time, the price of Bitcoin has not only exceeded $400, but is close to RMB 3,000, with a weekly increase of more than 50% and a monthly increase of even 100%.

The reasons behind the price increase are difficult to explain, and insiders and traders are left speculating on the reasons.

Recently, the Bitcoin industry has been receiving positive news, and the media has been reporting more and more positively on digital currencies. Although Bitcoin still has a negative image in the minds of the public, its underlying technology, blockchain technology, has been recognized and appreciated by most people, and blockchain technology continues to attract the attention of financial companies. The Wall Street Journal reported that Blythe Masters, former CEO of JPMorgan Chase and now CEO of Digital Asset Holdings, a digital asset company, recently appeared on the cover of Bloomberg Markets magazine with the title "It's all because of blockchain." This week, the cover story of The Economist was titled "Blockchain - The Next Explosive Technology," introducing the potential of blockchain technology. It seems that every bank on Wall Street has joined the craze of researching and experimenting with blockchain technology. Perhaps this shift has greatly changed people's views on the technology.

Bobby Cho, head of trading at New York-based bitcoin exchange itBit, said:

“The concept of blockchain has become a hot topic for discussion in almost every financial institution, every enterprise, and every media. However, Bitcoin is always mentioned in the topic of blockchain, so when you learn about blockchain, you will also know about Bitcoin.”

Interest in bitcoin’s blockchain technology may have boosted bitcoin trading activity, and the increase in trading activity has also stimulated market traders who have been sitting on the sidelines waiting for bitcoin’s market to become active again. Cho said:

"Now that volatility is back, these traders are thinking 'we can make some money from this now'."

Clearly, trading volume is rising. In early September, BTC China’s trading volume averaged about 20,000 BTC per day. Recently, trading volume on the platform has been close to 80,000 BTC per day, and the exchange’s CEO Bobby Lee told MoneyBeat on Tuesday that such trading volume is close to the platform’s record of 90,000 bitcoins per day. However, the bitcoin market is still a relatively niche market, so the increase in trading volume may be one of the reasons for the rise in bitcoin prices. Any buying frenzy will amplify the scarcity of bitcoin.

Some have speculated that China's capital controls may be one of the reasons for the rise in Bitcoin prices, as capital controls have stimulated citizens to use Bitcoin as a way to circumvent controls, but Bobby Lee disagrees. He said there are better ways to circumvent capital controls, such as in China, where there is a black market currency exchange system that is very similar to the Hawala system in the Muslim world, and people can effectively circumvent strict capital controls through this market.

In addition, when converting from US dollars to RMB, the price of Bitcoin will increase by as much as $10-15. Bobby Lee said that if it is capital control, it will be difficult for people to buy Bitcoin. Therefore, there is an arbitrage opportunity here - people buy Bitcoin with US dollars and then convert it into RMB. This makes it less likely for traders to transfer their RMB through Bitcoin.

Bobby Lee said that currently all bitcoin transactions in China are speculative, and the current positive media reports on bitcoin will stimulate speculators and drive up prices. He said:

“We have been in a bear market for a year and a half, so blockchain is a new hope for people. People are easily stimulated by market news. People are optimistic at the moment, and this sentiment has also affected the Bitcoin world.”

According to IBTimes, several other leading Bitcoin trading platforms in China (Okcoin, Huobi) also have similar views as Bobby Lee, believing that the rise in Bitcoin prices is related to domestic speculative trading. At present, the total daily spot trading volume of several major trading platforms such as Okcoin, Huobi, and BTCC has exceeded 2 million coins.

Jack Liu, International Business Director at OKCoin, said:

“Due to the impact of the stock market decline, domestic speculators hope to transfer assets through Bitcoin. This may be one of the reasons for the rise in Bitcoin prices.”

Astrid Tao, International Marketing Manager at Huobi, told   Bitcoin Magzine:

“We believe that most investors hold a positive attitude towards the future development of the Bitcoin industry. Capital flow is a reflection of market flow. It is undeniable that the MMM organization (which is seriously suspected to be a pyramid scheme) has driven the recent rise in Bitcoin prices to a certain extent.”

“We are only responsible for transactions, so it is difficult for us to tell the purpose and reason of their investment in Bitcoin. However, we will try our best to make these new investors understand the Bitcoin industry again and guide them to trade in the right way.”

Risk warning: Bitcoin prices have fluctuated greatly recently, so investment should be cautious.

Compiled by: printemps
Source (translation): Babbitt Information