Daily Management Review

Bitcoin Demand Rise Due To Announcement Of Facebook’s Libra; Pushes Past $13,000


Bitcoin Demand Rise Due To Announcement Of Facebook’s Libra; Pushes Past $13,000
The current tensions arising out of geopolitics, and the warm welcome and the apparent prospect that the cryptocurrebncy of Facebook called Libra could help bring the digital currency into the mainstream of world finance, prompted investors to seek out tools of safety and alternative investments which pushed the value of bitcoin to rise to an 18-month high earlier in the week.
Since April this year, there has been a surge the price of the largest cryptocurrency of the world. The crypto currency reached a high of US$13,666.02 on the Bitstamp exchange ear earlier this week which was the highest price hit by bitcoin since January 2018. There has been a rise of more than 260 per cent in the value of bitcoin so far this year. This cryptocurrency however is well below the all time high that it hit in December of 2017 at almost US$20,000.
Bitcoin last traded up 14.7 per cent at US$13,475.
After taking a beating in 2018, there has been renewed interest of investors in bitcoin. The cryptocurrency has been rising consistently for the last eight days straight. There was also a flutter in the crypto world after the announcement of the launch of cryptocurrnecy Libra by Facebook – which is expected to be launched by the end of June next year.
There has been a renewal of interest of crypto investors and in digital currency after the announcement by Facebook, according to analysts, primarily because investors are seeking to get hold of some from of safety tool of investment which has jacked up the price of bitcoin.
"Cryptocurrency traders were reinvigorated by Facebook's launch of their own digital coin and momentum appears to be stirring up fresh new investors," said Edward Moya, senior market analyst, at online FX broker Oanda in New York. "Bitcoin skeptics are cautious in trying to stop this surge and may look for the next key resistance level which is US$15,000," he added.
According to analysts, investors are seeking to find various ways to diversify their investments because most of the major central banks have not increased interest rates and have kept them at close to all-time lows.
Analysts also said that investors are trying to get hold of bitcoin via the derivatives market even as there has been an increase in the bitcoin CME futures volumes in the past few days.
Michael Moro, chief executive officer at Genesis Global Trading, which provides over-the-counter digital currency trading for institutional investors, said that those traders, who have access to both spot and futures markets have been buying the spot and selling the futures which is arbitraging the two prices.
Since early May, there ha sbeen a 150 per cent increase in the price of bitcoin while similar increases have also been seen in some of the other smaller cryptocurrencies such as Ethereum's ether and Ripple's XRP.
"It should be noted that this a very different market today than it was in 2017," said Moro. "2017 saw an overwhelming number of ICOs (initial coin offerings), which was very distracting. 2019 has less distractions. It's also a different space because the CME bitcoin futures product wasn't available until December 2017."