After a week of stability, Bitcoin has seemingly entered another rally beginning yesterday. The cryptocurrency is currently trading at $970 on Bitstamp with a healthy volume increase indicating an organic price rise.
Once again it is China that is leading this bull run as the price touched $1000 on OKCoin. Recently the PBOC cracked down on Bitcoin exchanges, and regulators forced the major players to add trading fees and implement stricter KYC / AML verification procedures. As a result, this time the volume has shifted to exchanges which haven’t implemented trading fees. The “big three”: BTCC, Huobi and OKCoin, are seeing their competitors such as BTCTrade, CHBTC, and BTC38 get a chance to claim a spot at the top.
Why is the price rising?
There are different theories as to why Bitcoin has been performing so well this year. The most popular one that is being circulated in mainstream media, is that Bitcoin is a great haven for Chinese businessmen who want to evade capital controls. However, if that was the case then the recent crackdown by the PBOC would have sent the price plummeting down. While the crackdown news did cause the price to crash somewhat, it is clear that Bitcoin bounced back with little effort. If capital flights isn’t the reason for the current market trend then what could it be?
According to BTCC’s CEO Bobby Lee, one reason for Bitcoin’s success could be that “People are learning about Bitcoin from the media and having confidence in the technology, which then leads to more people buying, the price continuing to rise and more media attention. The hype cycle continues.” To test this theory, we can take a look at a few metrics that can in a way, measure Bitcoin’s adoption rate. The below Google trends chart shows the popularity growth of Bitcoin’s interest over time, and it is clear that there is a slow but steady growth.
Another popular belief as to why Bitcoin’s price has been rising is due to recent political actions. Trump has enacted a ban for immigrants from seven countries (Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen), revoking them the right to enter the USA. Furthermore, Green Card holders will need to be evaluated on a case by case basis before entering the US. While such actions may not directly affect Bitcoin, the uncertainty of what is to come ahead is causing much distress in traditional stock markets.
Since cryptocurrency always had an inverse relation with stocks, it was only natural that it would see a positive trend. As Trump starts imposing more taxes on remittance, and more tariffs on Chinese importing and exporting, people will expect more similar actions. Any increase in taxes will only put more attention on Bitcoin as it is the only form of currency which is borderless and is extremely resilient to taxes.
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