Bitcoin Is Hot Again! Price Spikes Above $8,000!


In a move that will have cryptocurrency enthusiasts feeling vindicated and Bitcoin bears questioning themselves, Bitcoin has spiked off its recent lows of around $6,000 to cross the $8,000 threshold once again.

So where did this recent surge in Bitcoin and cryptocurrency enthusiasm come from and what does it suggest about the future of cryptocurrencies?

A Meteoric Rise and a Drop Into the Doldrums

Bitcoin and other cryptocurrencies finally broke into mainstream awareness when Bitcoin rapidly accelerated through $10,000 and peaked at around $20,000 last year.

This meteoric price rise had cryptocurrency enthusiasts claiming that a new dawn had come for all currencies, and made more than a few of them millionaires overnight, while its detractors claimed that it represented the biggest speculative bubble in human history.

Following this price peak, Bitcoin spent the next few months gradually dropping in price, all the way down to the $6,000 trough reached in the middle of 2018.

Detractors suggested that the bubble had popped and cryptocurrencies were on a long trip back to their original prices, while enthusiasts argued that this was merely a pause after reaching mass awareness and the true price spike had yet to come.

A New Dawn…Again?

This latest 30% spike in the price of Bitcoin and other cryptocurrencies has turned the table for many enthusiasts who now think they were right to keep believing in cryptocurrencies despite the temporary downturn.

They believe that 3 recent news releases have people believing in cryptocurrencies and making Bitcoin hot again.

Bitcoin ETF

After disappointing cryptocurrency enthusiasts with a failure to materialize last year, a Bitcoin ETF is now rumored to be receiving regulatory approval in the coming months.

Not only will a Bitcoin ETF drive sales in Bitcoin directly by allowing access to Bitcoin trading for people uncomfortable with the current cryptocurrency markets, but it also signals a growing approval from financial regulators for cryptocurrencies in general.

This perception of regulatory approval is important, as fears of regulatory crackdowns have long been cited as a reason for people to reject cryptocurrencies as a medium of exchange and a store of value.

Investment Firms

Some major investment firms including Blackrock, the world’s largest, are starting to include Bitcoin and other crytpocurrencies in their portfolios.

This acceptance by mainstream investment firms is a big nod to the perceived staying power and price trajectory of Bitcoin and other cryptocurrencies, as these firms have so far shunned cryptocurrencies as too risky for investments aimed at the mainstream populace.

As the biggest names in the industry embrace cryptocurrencies, it is likely that their acceptance by mainstream investors will only continue to grow.

Financial Stability Board

The Financial Stability Board, a major global financial regulator, has determined that Bitcoin and other major cryptocurrencies do not pose a threat to the stability of the global financial system.

This acceptance by one of the top global financial regulators is expected to influence the decision-making of many national regulators, some of whom have come down hard on cryptocurrencies for fear of their potentially destabilizing effects.

A Fourth, Less Popular Explanation

While the previous three explanations all give cryptocurrency enthusiasts reason to be optimistic about Bitcoin’s long term prospects, the 4th possible explanation for why Bitcoin is hot again may be less positive.

The recent trade friction between China and the United States has led to a dramatic devaluing of the Yuan. This means that in international terms, the wealth of many Chinese investors has decreased at a rapid rate.

While China retains firm capital controls on most official means of exporting capital, Chinese investors can still work around these restrictions by purchasing Bitcoin and other cryptocurrencies.

This would mean that the current spike in Bitcoin’s price is the result of temporary capital flight from China, which will be reversed when the trade war dulls and the Chinese Yuan appreciates in value.

Bitcoin’s Future

The meaning of Bitcoin’s recent hot streak will depend on your views of the long term prospects of cryptocurrencies in general.

However, whether you think this is the start of a fresh meteoric rise for reinvigorated cryptocurrencies or merely a short blip on their continued gradual decline, the recent spike in the price of Bitcoin has got everyone talking again, and the issue is obviously far from decided either way.