After months of lows, the cryptocurrencies are surging. On Monday, Bitcoin breached the $50,000 mark. This happened for the first time since May. Other coins – including Ethereum, Cardano’s ADA and Dogecoin – also gained pace. And it was only a few weeks ago that some strategists were eyeing a possible drop to $20,000 for Bitcoin, months after it had hit an all-time high near $65,000 in April.
Instead, sentiment is rising across the board. Crypto’s latest swings are a sign that Bitcoin miners are back in business after a recent Chinese crackdown.
At the same time, there is continued evidence of more mainstream acceptance. All of this is happening as the delta variant’s surge has muddied the timeline for a normalization of interest rate policy.
“There’s been an accelerating background of accumulation of crypto assets in the past couple months,” Jonathan Cheesman, head of over-the-counter and institutional sales at crypto derivatives exchange FTX, wrote in an email Monday. “Institutional flows in Bitcoin and Ether as well as a lot of retail activity in NFTs and gaming” are likely contributing, he added.
Here is what is driving the increase – and what’s coming next:
The cryptocurrency world is populated by a cast of characters whose voices can really influence prices. Lately, bullish noises have been boosting sentiment.
Elon Musk. Earlier this year, the billionaire caused heads to spin – and helped prices to boost and then plummet – when he said in March that Tesla Inc. would accept payment for its electric vehicles in Bitcoin but backtracked in May. He made his reversal on environmental grounds, expressing concern about the use of fossil fuels for cryptocurrency mining. Following those comments, Bitcoin lost about a quarter of its value in a week.
But here’s the latest twist: Over the past few weeks, Mr Musk has been striking a more supportive tone. In late July he said he personally owns Bitcoin, Ethereum and Dogecoin and would like to see crypto succeed.
Superstar investment manager Cathie Wood is another big voice in this space. A noted crypto bull, she told Bloomberg TV in May that she could see Bitcoin reaching a price of $500,000. More recently, she said she thinks corporations should consider adding Bitcoin to their balance sheets.
Just about a month ago, all the talk in the cryptocurrency world was of a Chinese crackdown. A ban on Bitcoin mining meant the abrupt shuttering of millions of computers that had been processing the transactions necessary to keep the crypto currency humming. Before the ban, around 65% of the world’s Bitcoin mining took place in China.
As computers went offline, the hash rate – a measure of the computing power used in mining and processing – halved in just two and half weeks.