Explaining the Bitcoin Price Surges

Bitcoin price surges has captivated investors lately. The exorbitant price hikes came about despite all of its recent shortcomings that began with the SEC ruling, the July 21st Ethereum flash crash and ended with the Bitcoin fork at the start of this month.

Since those tumultuous few weeks, the digital currency world has rallied to a market cap of $114B (as at August 17, 2017). Its all-time high was $120B a few weeks ago — which was unprecedented for the neo-currency. The question arises, what are the reasons behind this rally?

Here are six reasons explaining the price hike:

1. Blockchain Token Generating Events (TGE)

“Between 2014 and the end of 2016, a total of $295 million was raised” in TGEs. In 2017, the amount raised was $1.3B with a quarter of the year left. With an increasing number of TGEs, the demand for ether and bitcoin has gone up pushing up its prices.

2. Limited Bitcoin Supply

The bitcoin price spike is caused by a fundamental design of the technology. There is a finite number of bitcoin that can be mined: 21 million (unless there is a design change), and currently only 16.5 million bitcoin is in circulation. Thus, the scarcity of supply pushes up bitcoin’s price as new investors enter the bitcoin market. This phenomenon is also known as the token network effect.

3. China

Chinese investors’ increasing interest in alt-coins as a viable alternative to the heavily regulated Yuan as an asset class as well as an accepted means of payment in the country, have pushed up alt-coin demand and prices.

4. Currency Concerns

Like China, other countries such as Russia and India are also increasing their digital asset investments because of their currencies’ devaluations. Other investors worried about the prospects of traditionally dominant fiat currencies such as the British Pound and the US Dollar are also opting for bitcoin instead.

5. A New Asset Class

Cryptocurrencies are viewed as a new asset class as more and more institutional investors are taking a keen interest in the sector. With dwindling commodity prices, notably of gold which is down three percent since 2016 and down 22 percent in the last five year, bitcoin has risen in prominence.

6. Japan

The Japanese government recently recognized bitcoin as a legal tender, inciting more Japanese investors’ interest in digital coins.

Read more on the Celsius Network blog: https://medium.com/@CelsiusNetwork/why-are-cryptocurrencies-on-a-hot-streak-b3a9232b2ee9