The bitcoin rate returned to the marks of one and a half months ago, having exceeded $ 11.7 thousand. Over the week, the most famous cryptocurrency added almost 8% in price. The bullish play with virtual currencies occurs amid a weakening US dollar and growing demand for crypto assets from institutional investors.
The bitcoin rate renewed its 1.5-month high on October 13. According to Bloomberg, at the beginning of the day, the leading virtual currency’s value rose by 1.4% against the close of the previous day, to $ 11.73 thousand, the highest value since September 2. However, there was not enough strength to continue the game to increase, and by 18:30, the rate had stabilized near the $ 11.4 thousand marks. Even with this correction, the rate increased by almost 8% in seven days. The second most popular cryptocurrency in the world – ether (Ethereum) – has risen in price by 12% over the week, to $ 380.
A confident recovery in the quotations of virtual currencies took place against the background of the weakening of the dollar. Over the past three weeks, the DXY index (the US dollar exchange rate against six leading world currencies) has decreased by 1.7% and returned to the level of 93 points, and on October 13, won back a small part of the lost positions, reaching 93.4 points. The weakening of the American currency occurs on the expectations of expanding the monetary stimulus program in the United States. The White House on October 9 almost doubled the size of the proposal – to $ 1.8 trillion. “Recently, there has been a clear inverse correlation with the dynamics of the dollar index – the weaker the US currency, the higher the interest in alternative assets that can protect against unprecedented monetary expansion,” said Arikapital investment strategist Sergei Suvorov.
In such an environment, it should come as no surprise that institutional investors are starting to take an increasing interest in digital currencies. In September, the American software provider Microstrategy converted all the cash on its balance sheet of $ 425 million into Bitcoin; on October 8, it became known that Square of Twitter co-founder Jack Dorsey invested $ 50 million of its own funds in bitcoin, on October 13 there were reports that Stone Ridge was buying bitcoins worth $ 115 million. “This is a small bet for a large player, but it enhances the reputation of bitcoin and the entire cryptocurrency market as a whole,” says Anatoly Knyazev, co-founder of EXANTE. “Market participants expect that the arrival of players such as Square may initiate a race for corporations to gain a stake in the bitcoin pie,” notes Sergey Suvorov.
The “bullish” momentum is still supported by the third halving (the process of dividing the number of generated rewards for mining a block in half), which took place back in May, market participants believe. This step led to a halving of the miner’s remuneration for bitcoin production to $ 7 thousand. “At the same time, the miners continue to hold the hash rate (the total power of the computing equipment used to extract the cryptocurrency – Kommersant ) at a historical maximum, confirming their confidence in the prospects of the first cryptocurrencies “, – said Mr. Knyazev.
Market participants do not exclude further growth in the rate of digital currencies.
According to the head of the data analysis department of CEX.IO Broker Yuri Mazur, various legislative initiatives to legalize tokens of various cryptocurrency and blockchain projects will overall positive impact on the market. Also, news of large investments in crypto assets from large companies and investors will contribute to the rise in bitcoin’s value. The development of the situation around the second-largest crypto-derivatives exchange BitMEX, the owners under investigation in the United States, will be of great importance for the market. The Commodity Futures Trading Commission (CFTC) accused them of maintaining an unregistered trading platform and violating CFTC rules, including anti-money laundering and customer identification. “The situation with BitMEX may seem similar to the closure of Silk Road in 2013.