Bitcoin (BTCUSD-Bitfinex) is currently trading around 3729.80, soared by almost +8.40% and so far made a session high of 3800; earlier it made a session low of 3425.30. Other cryptos also jumped between 8% to over 30%. Litcoin (LTCUSD-GDAX) zoomed over 35% to a session high of 44.48 and is currently trading around 42.37; surged by almost 30%.
As a reminder, BTCUSD made a life time high of around 19891.00 in December’17 on talks of various regulatory approval and launch of future contract, enabling the short sell by institutions. It was precisely that short selling coupled with various crypto frauds, regulatory headwinds and a deluge of controversies, BTCUSD as-well-as other cryptos plummeted almost 85% from their respective life time highs, creating a panic like situation for the cryptos. The crypto mining demand collapsed and shares of chip makers/high end computer maker like Nvidia plunged.
Subsequently BTCUSD made a low of around 3219.24 in Dec’18 from its Dec’17 peak of 19891.00 (Bitfinex). In February, BTCUSD jumped almost 6.50% (till now) after around 70% plunge in the last 6-months (Aug’18-Jan’19).
Although, the specific catalyst of Friday’s dramatic surge is still unclear, it may be a combination of bargain hunting, renewed crypto tech optimism (block chain, ledger distribution), reports of increasing crypto mining, increasing application of crypto techs, especially with Litcoin, Venezuelan sanction and subsequent higher uses of crypto to bypass USD/SWIFT and the start of Chinese new year (Chinese market will open from Monday-11th Feb).
Cryptos also have some “risk-aversion” safe haven appeal amid increasing geopolitical tensions from Brexit to Trump trade war coupled with talks of an early end of Fed’s QT. A dovish Fed is also positive for cryptos (like digital gold/silver).
As per reports, institutional investors are again showing interest in cryptos as an investment in a new tech after its epic crash in the last one year. The crypto market now is looking for an orderly movement rather than “boom & doom”. The underlying technology in the cryptos is now gaining more tailwinds than a digital currency, which may have never accepted by the global central banks. In that sense, cryptos may be viewed as a tech asset of the future rather than an alternative currency.