The Bitcoin (BTC) price has surged to around $10,870.30 according to CryptoCompare data. This significant price increase has come after the pseudonymous cryptocurrency’s value dropped as low as $3,150 in December 2018.
Bitcoin’s market capitalization currently stands at around $193 billion. Meanwhile, Ether (ETH), the native token of the Ethereum blockchain, is currently trading at over $300 and its market cap has exceeded $32 billion at press time. This, after the ETH price briefly plummeted below the $100 mark in early December 2018.
What’s Behind the Current Crypto Market Rally?
Indeed, cryptocurrency prices have recovered after enduring an extended bear market which lasted throughout 2018. According to several analysts, the reasons or factors behind the present digital asset market rally are different from those which led the historic crypto market bull run of 2017.
Bitcoin Price May Reach $40,000
Thomas Lee, the Co-Founder at Fundstrat Global Advisors, recently argued that if the BTC price manages to break the key psychological $10,000 mark (which it did), then the world’s most dominant crypto will create FOMO (fear of missing out). This, Lee believes, will lead to bitcoin surging past its previous high of nearly $20,000 (set on December 17, 2017) and possibly reaching the $40,000 price range.
Commenting on the recent price movements in the crypto market, Tone Vays, a widely-followed crypto researcher and consultant, told Cointelegraph:
I actually don’t think [the $10k mark is] important at all. The $10,000 benchmark did nothing to slow down price back in 2017. And it looks like it did nothing to slow down the prices here in 2019.
Increased Inflow of Institutional Capital Leading to Surging Crypto Prices?
Notably, many crypto researchers believe that the crypto market rally of late 2017 and early 2018 may largely be attributed to the interest shown and investments made by retail investors. The present rally, however, may be due to an increased inflow of institutional capital into the nascent digital asset ecosystem. This, according to the latest data from Google Trends, which suggests that institutions are now more interested in crypto-related initiatives than ever before.
Current Google Trends data also shows that search interest for “Bitcoin” is only about 10% of the level it reached in 2017. Widely-followed crypto journalist Joseph Young believes “FOMO amongst retail investors has not even begun yet, possibly not even close to it.”
The interest for bitcoin now in 2019 does not even compare to 2017 on Google Trends, which I think is a good indicator of retail interest.
On a scale of 100, 2017 was 100 and 2019 June is 12.
FOMO amongst retail investors hasn't begun yet, possibly not even close to it.
— Joseph Young (@iamjosephyoung) June 22, 2019
$290 Million in Bitcoin Futures Contracts Suggests Strong Institutional Demand
While overall retail investor interest in cryptoassets currently appears to be relatively low, institutional demand for Bitcoin, the world’s most dominant cryptocurrency, seems to have increased significantly. Notably, the open interest for BTC futures (as of June 17, 2019) at the CME Group has led to 5,311 contracts – valued at about 26,555 BTC (appr. $290 million at current prices).
On June 18, 2019, CME Group’s management noted:
CME Bitcoin futures (BTC) shows growing signs of institutional interest. BTC open interest rose by a record 643 contracts in a single day, establishing a new all-time high of 5,311 contracts.
BitMEX Hits All-Time Record in BTC Derivatives Volume
Other notable factors indicating strong institutional interest include an all-time record volume for BTC derivatives – which was recorded recently on the Bitcoin Mercantile Exchange (BitMEX), a leading Seychelles-registered and Hong Kong-operated crypto derivatives exchange.
Congratulations bitcoin traders.
We just put in the highest volume day in @BitMEXdotcom's history.
On a Saturday.#btc #bitcoin #btcusd pic.twitter.com/nxcIbxg9zw
— Joe McCann (@joemccann) June 23, 2019
Moreover, Grayscale Investment’s GBTC premium showed that most of the firm’s institutional clients continued to invest in Bitcoin (BTC).
6/21/19 UPDATE: Holdings per share and net assets under management for our investment products
Total AUM: $2.3 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $XRP $ZEC pic.twitter.com/PtHuCLdjes
— Grayscale (@GrayscaleInvest) June 21, 2019
BTC Network Hashrate Hits All-Time High
On June 21, 2019, the Bitcoin network hashrate reached yet another all-time high of more than 65,000,000 TH/s. This means that there are now more miners contributing their hash power to maintain and improve the security of the Bitcoin blockchain than ever before.
Daily transactions volumes on the Bitcoin network and block size (among other key metrics) also seem to suggest that the cryptocurrency now has more active users than ever before. Despite the surge in activity on the BTC blockchain, transaction fees are still relatively low when compared to 2017.