About a week ago, Bitcoin first broke $300, and the community suggested that holding ground above this level for some time would probably result in a buying spree. The value of the cryptocurrency keeps advancing strongly and now has broken beyond $400.
There are various reasons for this so-called comeback. Market participants say that first of all, it’s all about big financial firms paying attention to Bitcoin. Such companies as Goldman Sachs, Morgan Stanley, and others are extremely attracted by the technology behind Bitcoin – the blockchain.
As a vivid example, a week ago, Digital Currency Group, the company which builds and incubates Bitcoin and Blockchain technology-related firms, raised capital from MasterCard, Bain Capital Ventures, CME Ventures, Canadian Imperial Bank of Commerce, New York Life, and others.
According to Gil Luria, an analyst at Wedbush Securities, Bitcoin is finally catching on with the financial establishment:
“It is becoming increasingly clear to banks and financial institutions that bitcoin and blockchain technology will become an important part of the future delivery of financial services based on media coverage and investments by other large banks. As investors realize that many of the applications will be built on the bitcoin blockchain, they eventually arrive at the conclusion that if these applications succeed the price of the bitcoin currency will go up. Our 12-month price target for bitcoin is $400 based on expectations for broad adoption of bitcoin applications within the next ten years.”
In addition, it’s necessary to mention that the United States Marshals Service is going to sell another 44,341 bitcoins seized during the raid of the Silk Road marketplace. The final auction is planned to be held from 8 a.m. till 2 p.m. eastern on November 5. It’s obvious that this auction can also have an effect on Bitcoin price.
However, there’s another quite interesting reason for the rise. The economic situation in China could be fuelling Bitcoin by encouraging local investors to make everything possible to move their funds out of the country. The cryptocurrency offers a “potential avenue around capital controls.”
Bobby Lee, CEO of China-based bitcoin exchange BTCC, stated that “people are re-discovering the many positive aspects of using bitcoin for payments as well as for holding bitcoin as a decentralised, safe and appreciating digital asset, immune to national central bank policies.”
Robert Viglione, a PHD student, who published an academic paper about Bitcoin price, said:
“It’s tough to ever say definitely what’s driving asset price movements, but the most compelling story at the moment comes out of China. True to bitcoin’s nature as a disaster asset, as China’s government steps up capital controls to limit one widely used avoidance path, its citizens appear to be shifting resources to the next best option, cryptocurrencies.”