5 Plausible Reasons the Bitcoin Price Exploded on Friday
Bitcoin jumped by as much as 42% on Friday.
You gotta love crypto, right? Just when everything’s doom and gloom and all the indicators are bearish, the markets go on a tear. Bitcoin jumped by as much as 42% on Friday, marking its highest intraday gain since 2011–and the crypto community was elated. We’re pretty sure that you participated in a few lively chats over the king of crypto’s latest run. But did you stop to question what was behind it? Here are five possible reasons for the Bitcoin price pump.
1. The Chinese President’s Blockchain Endorsement
As the news began to emerge on Friday that China’s President Xi Jinping had made a speech endorsing blockchain technology, the markets began to react. Zuckerberg eerily warned the US Congress that China would beat them in the innovation race if they failed to act on Libra. It appears that Xi Jinping was ready and waiting to pull the trigger.
Not only did he come out in support of the new technology, but he called it a “breakthrough”, and promised to allocate more funding:
“We must take blockchain as an important breakthrough for independent innovation of core technologies, clarify the main directions, increase investment, focus on a number of key technologies, and accelerate the development of blockchain and industrial innovation.”
While many pointed out that it was the “blockchain not bitcoin” narrative, it seems that China isn’t messing around.
They have since passed a new cryptography law, are full steam ahead on their own digital currency, and investors are maxing out Chinese blockchain A-share firms on the stock market. Is China FOMOing into Bitcoin by default?
AGAIN, all of these I think is building narratives, gaining mindshare, pushing out the political and legal foundation for the upcoming digital RMB, which will roll out by the end of this year or early next year.
THE RACE IS ON pic.twitter.com/qesW5RRHvz
— Dovey ???? Wan ? ? (@DoveyWan) October 26, 2019
2. CME Bitcoin Futures Expired
CME Bitcoin futures expired on Friday and that typically has a big effect on volatility. The contracts closed the week at $8,715. This was a very strong performance given that just Wednesday of last week, BTC was languishing in the low seven thousands after a flash crash.
Could this have spurred Bitcoin price? Maybe. Although it seems rather unlikely that this event alone was the cause of the record day where BTC flirted with $10,500. It still shows the power of Bitcoin futures for influencing its value, though.
3. A Strong Day for S&P 500 Nearing All-Time Highs
One opinion put forward that had nothing to do with either Bitcoin futures or China was that of Fundstrat co-founder and analyst Tommy Lee.
+12% rally in #Bitcoin coinciding with strong equity day as S&P 500 nearing all-time highs…
– a reminder of the ‘unpopular’ opinion that the bitcoin performs best when S&P 500 rallies.
– best years Bitcoin when S&P 500 return >15%.$BTC mostly retail, thus, mostly ‘risk-on’
— Thomas Lee (@fundstrat) October 25, 2019
As per his tweet, he admitted that his opinion was not a popular one. However, according to him, Bitcoin does better when the stock markets do–meaning they have a positive correlation. Could that be the case?
A Bitcoin rally when the S&P nears all-time highs? Maybe, we certainly can’t rule it out.
4. Bakkt Also Had a Record Day
Finally, after a disappointing start, Bakkt’s trading volume is starting to pick up. On Friday, the same day as Bitcoin’s epic run, Bakkt recorded a record day for futures contracts at over 1,100 BTC.
? Today’s volume so far: 1131 BTC
? Last traded price: $8,622.50
? Trading day progress: 54% (if this continues: 100% equals to 2095 BTC)
— Bakkt Volume Bot (@BakktBot) October 25, 2019
The company also announced the same day that it will be adding options contracts to its product offering. This again may not be cause enough for such epic highs that we saw on Friday. However, it does feel as if the perfect storm may have been created for the Bitcoin price surge.
5. Dorsey’s Twitter and Square Love Bitcoin
Once again, on Friday, another hugely influential billionaire came out in support of Bitcoin. Twitter and Square CEO Jack Dorsey started with bashing project Libra, saying “hell no” Twitter would not be joining them. He then said it would have been better for Facebook to accept Bitcoin rather than establish a whole new ‘cryptocurrency’ (which was not actually a cryptocurrency at all).
Why Does the Bitcoin Price Matter?
Of course, when the price is down and people are soldiering on, you hear much more talk about the tech. You hear about network fundamentals, hash rate, infrastructure being built out for companies and individuals. The staunchest supporters will tell you that Bitcoin’s price is insignificant.
But when you get a day like Friday, there is not one single person in the Bitcoin community that fails to get excited. BTC price matters. Each cycle of volatility brings more media attention and onboards more users.
Bitcoin’s market cap rises and these signs from Bakkt and from Chinese blockchain investors are showing that institutions may be getting ready at last. That means that Bitcoin has a very bright future and so do Bitcoin futures.
We’re almost one month away from the official launch of the Digitex Futures public testnet on 30 November. With Bitcoin proving it’s anything but boring, we can’t wait to open up our zero-fee BTC futures trading platform to you all.
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