In spite of speculation the bitcoin network could split into two separate blockchains, demand for the digital currency continued to remain strong during today’s trading session.
The digital currency has mostly been trading north of $1,000 today, dipping below but rebounding shortly after, according to the CoinDesk Bitcoin Price Index (BPI). Further, volumes at two of the world’s largest exchanges, Bitfinex and Kraken, were robust, with figures charting higher than the 30-day average.
Yet, given the possibility that the network could see significant turbulence in the event of technical schism, some market observers were left openly wondering why bitcoin prices were still high.
At the time of report, bitcoin was trading at $1,005.29, 20% below its all-time high, but up 142% year-over-year.
So, who’s purchasing the digital currency and propping up its price? Some analysts were left stumped.
Jacob Eliosoff, a cryptocurrency fund manager, told CoinDesk:
“All we can say for sure is that someone is buying to keep the price as high as it is.”
Possible variables
As for what has been fueling bitcoin’s sustained demand, other market analysts offered varying explanations, most of which revolved around speculation and uncertainty.
Some traders may be trying to buy the dip, as bitcoin prices have fallen, and observers reasoned this means there’s the possibility of gain.
Charles Hayter, founder and CEO of exchange service CryptoCompare, told CoinDesk that while traders are “skittish”, there will always be people “trying to catch the bottom” when prices decline.
Petar Zivkovski, COO of leveraged cryptocurrency trading platform Whaleclub, provided similar sentiment.
“Most of the buying going on is speculative, as far as we can tell, going after short-term profits, opening and closing trades within a day to minimize exposure on this uncertain market environment,” he said.
Harry Yeh, managing partner of investment manager Binary Financial, suggested short sellers may be playing a key role in keeping bitcoin prices at their current level.
“Lots of people were short, and they have been covering their shorts (ie buying),” he speculated.
Others, he said, might simply be caught on the wrong side of what could be an impending correction.
He told CoinDesk
“This recent bounce is a dead cat bounce, and it’s a bull trap.”
Perseverance concept via Shutterstock
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