July 3, 2022

3 Possible Reasons Behind Bitcoin’s Surge towards $56k

3 min read

After weeks of having a hard time and rapidly declining, bitcoin took off in the previous few days and neared $56k – – its highest cost line because mid-May. Yesterday alone, the cryptocurrency acquired more than $5,000 of value in hours.

While the bulls celebrate, it’s worth exploring prospective reasons that might be and might there be more comparable developments hiding behind the corner.

Factor 1: Whale Purchases

Being an asset with a maximum supply of simply 21,000,000 tokens with a big portion of the existing ones lost or in the hands of long-term holders, the price of BTC might change difficult whenever the so-called whales make significant purchases (or sales).

Data provided by CryptoQuant’s CEO – – Ki-Young Ju – offers a comparable example. The purchase came roughly 24 hours ago – – or just ahead of the $5,000 move. In it, someone (or multiple celebrations) accumulated $1.6 billion worth of bitcoin through market orders in simply 5 minutes, Ju explained.

He added that the short liquidations at that point were still fairly small – – around $17 million – – which makes it most likely that this was a whale purchase instead of “waterfall liquidations.”

Bitcoin Purchase From a Whale. Source: CryptoQuant
Bitcoin Purchase From a Whale. Source: CryptoQuant Factor 2: On-Chain Metrics Probably the most essential part of the health of the Bitcoin network is the hash rate, which is

determined by the variety of miners putting their computational gadgets to deal with the blockchain. Interestingly, it has actually been formerly linked to BTC’s cost. Even the popular BTC maximalist Max Keiser previously asserted that when one goes up, the other tends to follow (and vice-versa).

The hash rate had actually reached an all-time high of almost 200 Ehash/s in May this year – – soon after the USD rate of BTC had charted its own record of $65,000. Following the FUD from Elon Musk and China, both went down hard.

Bitcoin’s rate bottomed below $30,000 (a roughly 60% decrease), while the hash rate decreased to 70 Ehash/s – – a comparable

drop. Now, though, both have actually been on the rebound. Aside from the previously mentioned cost advancements, the hash rate is presently at above 130 Ehash/s, according to Bitinfocharts data. Once again, its recovery is similar.

Bitcoin Hash Rate. Source: Bitinfocharts.com
Bitcoin Hash Rate. Source: Bitinfocharts.com Aside from this, as we’ve covered thoroughly in our bitcoin rate analysis, other on-chain metrics are likewise suggesting that the bullish belief is warranted. Most of the current sell-offs were caused by weak hands selling, while long-lasting holders and miners continue collecting.

Factor 3: The United States

We’ve seen in the past what a reiteration of an already existing restriction can do to the market. The world’s most inhabited country has acted versus the cryptocurrency market for many years, but each time it repeats the exact same ban (or comes with a slightly various one), prices slump right away.

As such, it would be sensible to assume that the opposite could have an useful result on the marketplace. The world’s largest economy by small GDP – – the United States – – has no intentions to incorporate a restriction on the industry. This was first asserted by Fed Chair Jerome Powell before the SEC manager Gary Gensler duplicated it days later.

Interestingly, BTC indeed soared by a few thousand dollars following the motivating words from Powell. However, it’s worth wanting that the United States still means to carry out guidelines on the cryptocurrency space but a minimum of does not wish to follow China’s path.