Could this be the start of a turnaround?
Bitcoin price, which has been in a downward spiral since the start of this year, is showing signs of reversing course. It raced past $7,000, a figure it had last touched more than a month ago, this afternoon. Within a short time span of two hours, bitcoin price jumped by 8.6% to $7,341, before settling into a horizontal movement within that price range. At 2:09 UTC, the price of a single bitcoin was $7339.61, unchanged from its price 24 hours ago.
The overall cryptocurrency markets moved in tandem with bitcoin price and gained 7.8% in less than an hour. In monetary terms, that gain translated to an addition of $22 billion to the markets. The top 10 cryptocurrencies registered significant increases to their market capitalization. EOS, a coin that faced investor backlash for problems with the launch of its mainnet, racked up the highest gain with an increase of more than 10% in its price. As of this writing, cryptocurrency markets were worth $293.2 billion, up from $272 billion 24 hours ago.
Why Did Bitcoin’s Price Jump?
According to CNBC, the catalyst for bitcoin’s price increase was news that credit card company Mastercard had been awarded a patent to expedite cryptocurrency transactions. The patent describes a new system proposed by Mastercard. In the proposed system, Mastercard would link user cryptocurrency accounts to user profiles that identify pertinent information related to fiat currencies. The document describes the user profile as containing a user’s “fiat currency amount, blockchain currency amount, an account identifier, and an address.”
Analyst Tom Lee of Fundstrat appeared to CNBC’s Fast Money to discuss the sudden spurt in bitcoin’s price. He said bitcoin was trading 30% below its 200-day average and that was a “pretty positive” signal. “If you look forward to the next six months, you’re going to do pretty well owning bitcoin,” he said, adding that bitcoin’s current price was a “huge bull signal” that it was nearing the end of a correction period in its prices. After nearing almost $20,000 in December of last year, bitcoin’s price has slid precipitously this year. A series of hacks and scandals coupled with criticism of the cryptocurrency by governments and prominent economists is mainly responsible for the slide.
Will It Last?
The current surge in bitcoin prices comes after a wave of positive developments related to cryptocurrency. North America’s biggest cryptocurrency exchange Coinbase announced that it was close to being granted a license to operate its three acquisitions in order to become a broker-dealer. The exchange had also earlier announced that it was considering addition of new tokens to its wallet and exchange platforms. IBM is reported to be launching a stablecoin that will be insured by the FDIC. Blackrock, the world’s biggest asset manager, also announced its interest in blockchain. Litecoin, the sixth-most valuable cryptocurrency, announced purchase of a German bank to streamline transactions. These developments point to a strengthening of the cryptocurrency ecosystem for future use. While they may not translate to the phenomenal and rapid price increases witnessed last year, it is likely that the increases this time will be less volatile as compared to last year and the price increase will have legs this time around.