Mad Crypto: A post-Blockchain Week explainer about bitcoin's price

This post first appeared in Frank Chaparro’s weekly column “Mad Crypto,” which is sent to Genesis members’ inbox every Monday morning. 

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Despite the surge in bitcoin's price over the last month, I can happily report that this year's Blockchain Week was far less focused on speculation and money-making schemes, and far more focused on shining light on the builders, developers, and institutional players of the crypto market. 

 

Still, the question of what's behind the market upswing was top of mind for many bitcoin enthusiasts as they zipped around Manhattan. Indeed, one of the most frequently asked questions during meetings, panels, and revelrous drinking was "what do you think is behind this bullish sentiment?"

 

Bitcoin is up 105% year-to-date, at last check trading at $7,878 a coin.

 

Humbly, I can say I haven't the faintest idea. But I can present some educated guessing, gleaned from some of the smartest minds I bumped into during the week's events.

 

 

Observers of the Chinese market will know that the nation's government has been doing everything it can to fend off economic strife as a result of the Trump Trade War. As part of those efforts, officials have been lowering interest rates on mortgages to heat up the market, while stimulating sectors of the economy powered by housing such as steel, cement, and glass.

One Japan-based crypto market maker told me that the artificial pick-up in real estate could have trickled into the crypto world. "What do you do with that gain if you know the music is going to end soon, and you are worried about your own currency? Naturally once you get this money you are going to want to get it out of the country ASAP."

With strict capital controls and limits on where folks can invest, bitcoin could have been Chinese investors' best option. Interestingly, Bloomberg News reported this morning that interest rates for Chinese mortgages declined for the first time since 2016.

Bakkt

To be clear, this one is just a rumor, but it could be an interesting catalyst behind the bitcoin uptick. Bakkt, the crypto futures and custody solution, has long been a source of speculation.

Now, speculators are suggesting that Bakkt was buying up bitcoin earlier this year to prepare for the roll-out of its bitcoin futures platform to satisfy demand with enough liquidity. That initial buying, they say, could have been behind the market move. 

Sentiment

Of course, we could have just seen a sentiment shift in the market from bearish to bullish. As much as people often look for a specific reason behind a sharp move, this is frequently the only real reason.