On Tuesday (May 14), bitcoin surpassed US$8,000 after climbing 25 percent on Monday (May 13) alone, which is the first time since August 2018 the top cryptocurrency has reached this price level.
Additionally, bitcoin’s market capitalization reached over US$1.46 billion as its price rose as high as US$8,265 on Tuesday according to CoinMarkCap. Over the course of Tuesday, the cryptocurrency’s market capitalization trended upwards from US$1.39 billion at the beginning of the day.
However, according to TechCrunch, many are questioning what is behind bitcoin’s recent price spike, with some pointing to trade recession fears in traditional markets, while others are pointing to market frenzy.
The publication also notes others suggest there is a “short squeeze” taking place. This is where short-sellers betting against the price of bitcoin are forced to buy back their positions at market price. In turn, buying pressure ensues.
Technical analysts are citing that bitcoin prices are breaking key levels of resistance, specifically US$6,000, US$6,400 and $6,800. In the month of May alone, according to CoinMarketCap the price of bitcoin has risen from US$5,392 to US$7,848 as of 6:22 EDT on Tuesday.
In a report published by PriceWaterhouseCoopers (PwC) and Elmwood Asset Management, data shows that crypto hedge fund assets under management (AUM) inflows have grown to a median of US$4.3 million. This is over triple the amount of US$1.2 AUM seen in January 2018.
Surveying 100 hedge funds, the report further notes that the funds performed on average, significantly better than bitcoin, with 46 percent losses, compared to bitcoin’s 72 percent price decline in 2018.
The report notes that it estimates there to be 150 crypto hedge funds in the marketplace.
On Tuesday, CoinDesk reported that an executive at TD Ameritrade (NASDAQ:AMTD) said that the company is getting an influx of interest for crypto, saying that 60,000 clients are interested in digital currencies. Thomas Chippas, CEO of ErisX, was quoted in CoinDesk as saying there is investor demand for bitcoin futures that are physically settled.
Currently, Bakkt, a bitcoin-centered futures exchanges is in talks with the US Commodity Futures Trading Commission (CFTC). According to a Bakkt blog post, the exchange is working towards developing physically settled bitcoin futures, with an anticipated test date planned for July.
Meanwhile, also on Monday, Ice Futures filed with the CFTC for bitcoin futures contracts approvals. Its bitcoin futures are anticipated to begin trading sometime in 2019.
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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.