In yet another demonstration of its volatility, Bitcoin price reached a new high this morning before falling back by almost 5% within a matter of 45 minutes.
As of this writing, the cryptocurrency is trading at $11,736.25, almost unchanged in its price from 24 hours ago. Earlier this morning, a single bitcoin was changing hands at $12,294.25, per Coindesk data. That figure represented a gain of 6.5% from its price last night and 28.1% from the same time last week.
Cryptocurrency markets rallied along with Bitcoin. Their overall valuation rose from $293 billion on Sunday evening to $319 billion this morning, an increase of roughly 9%. But they have since pared back their gains and have an overall market capitalization of $307.2 billion.
Reasons for Rally
Analysts and commentators have mostly ascribed Bitcoin’s price rally to China’s devaluation of its currency. The reasoning here is that fearful investors are putting their money into Bitcoin to protect their investments and escape capital controls that may be imposed by the government. Jeremy Allaire – CEO of crypto-based payments platform Circle, told CNBC that China’s softened stance regarding cryptocurrencies and Bitcoin could have also contributed to the rally.
Another reason being trotted to explain the price rally is the possibility of a no-deal Brexit. “The possibility of a no-deal Brexit could very well have people hedging themselves against the potential of another leg down for the Pound Sterling,” wrote eToro analyst Mati Greenspan in his daily newsletter. Given Bitcoin’s pseudonymous nature and the absence of transparency regarding its transactions, it is difficult to take these explanations at face value.
Investors are not complaining, however, since they are raking in profits. Some, like billionaire investor Michael Novogratz, are predicting a sustained rally due to prevailing global instability.
Other metrics that are used to evaluate Bitcoin remain stable. Its transaction volume is inching upwards. The good news is that the transaction fee associated with those transactions has also remained low. The difficulty of the puzzle used to mine bitcoin is also increasing, meaning that the average amount of resources expended to mine bitcoin is steadily increasing. An increase in difficulty levels in the past has led to an increase in prices because the cryptocurrency becomes scarce in the markets as miners cut back on bitcoin production to sustain their profit levels.