• October 22, 2020

Bitcoin Hits 5-Month High Following Fed Chair Powell’s Privacy Praise

Bitcoin’s (BTC) price is trending solidly back again over the 5-digit figure mark.

At around 15:00 UTC on February 11, the price of Bitcoin rose back again above $10,000 from around $9,850 to $10,351 in an hour after succumbing to a little sell-off beneath the $10,000 level on February 10, Markets data displays.

The peak figure represents Bitcoin highest point in over five months and offers a shift in trend from bearish-to-bullish in the mid-term since it continues to print new highs in 2020.

The recent rise in Bitcoin price comes amid Federal Reserve Chairman Jerome Powell’s testimony to the United States House Financial Services Committee on Tuesday where he discussed the necessity for privacy amongst digital currencies when eyeing through the lens of China’s digital yuan.

“A ledger where you know everybody’s payments isn’t something that will be particularly attractive in the context of the United States,” Powell informed the committee.

David Freuden, blockchain innovation and cryptocurrency consultant at Monsterplay, and a proponent for privacy coins told that while Powell’s comments are “somewhat bullish,” the concern would be that the United States govt will insist upon creating “back-doors” on all major technology innovations.

“The United States govt has the misguided assumption that it might be the only government that would demand or coerce a back-door,” Freuden stated.

Besides Powell’s latest comments, the sudden surge in value may be related to three catalysts including increased institutional and retail demand for cryptocurrencies, Bitcoin halving event and macro developments, with a focus on the uncertainty surrounding the coronavirus outbreak, experts and traders stated.

Joshua Green, a cryptocurrency derivatives investor, operating in Australia, told that a combination of “bullish sentiment” around Bitcoin halving event, altcoin sentiment “dragging everything higher” and coronavirus worries supporting the macro perspective are key factors.

“A lot of buying seems to be physical in nature, which is great,” Green said.

Bitcoin halving

Bitcoin halving event, an occurrence every 4 years where in fact the bitcoin network undergoes a 50% decrease in its mining rewards, has been spurring bullish sentiment reflected in both the spot and derivatives markets.

Data from Skew analytics demonstrates how institutional buying pressure continues to supply a solid base of support for the world’s largest crypto by market cap, reflected in a legitimate increase in derivatives volume and open interest.

Analysts prefer to keep an eye on changes in open up interest to determine the strength of certain price moves. An uptick in price plus a rise in open interest is telling of the strength behind the move to higher prices. A trend is said to be lacking substance when the two metrics move around in opposite directions.

Also, spot volume on leading exchanges like Binance is up 13% during the last 24-hour, data at Nomics displays.

Macro view

The sentiment of ‘Bitcoin being a safe haven asset’ continues to hold water as main world events such as last month’s debacle with Iran as well as the United States helped drive prices higher, according to Tim Shaler, main economist and professional trader at iTrust Capital.

“We believe one of the key drivers within the last five weeks roughly of the fast rise of BTC/USD might have been the risk of war with Iran,” Shaler stated.

Simon Peters, an analyst at eToro, agrees and said that if the price of Bitcoin remains to be above $10,000 after that it would most likely give traders confidence and “stoke” increased buying activity.

“There seems to be even more curiosity about bitcoin and other crypto-assets as potential safe havens for investors worried by the volatility of the stock markets mainly because the coronavirus crisis continues,” Peters said.

Altcoins are also experiencing increased bullish sentiment seeing that major names like ethereum (ETH), tezos (XTZ) and EOS (EOS) are up 10-12% on the 24-hour basis before Powell’s comments, while privacy coins such as Zcash and Monero are also up between 7-9%.

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