3 Reasons the Bitcoin Price Rally Is Sustainable

As the bitcoin price surpasses the $8,200 level and climbing, it’s clear that the leading cryptocurrency by market cap is in bull-market territory. It’s been more than two months since we’ve seen the $8,000 level for the bitcoin price, and the bullish sentiment finally appears to be spilling over into many altcoins, which until the past 24-hours had not joined the party.

Investors have seen this movie before, and many are wondering whether the catalysts are strong enough for the gains to be sustainable. If you ask Brian Kelly, a cryptocurrency trader who runs BKCM, the rally is likely here to stay. In an interview with CNBC, Kelly identified three drivers that will fuel the bitcoin price for the foreseeable future.

  • “ETF Speculation”

The possibility of a bitcoin ETF was given new life with the CBOE’s July application for its version of the product. While the U.S. SEC has been hesitant to approve one in the past, regulators may not be able to deny the overwhelmingly positive response they’ve received from the market on this topic.

Kelly isn’t expecting a bitcoin ETF to necessarily surface in 2018, but the speculation in and of itself is promising and can be thanked for bitcoin rallying out of the doldrums from $5,800 to its current bullish level.

  • “Institutions Getting Serious”

Based on anecdotal evidence comprised of conversations that Kelly is having with institutional investors, it’s clear now that bitcoin “is not going away.” As a result, institutions who balked at the bitcoin price near $20,000 are now seriously considering finding an entry point at $8,000. It’s already starting to happen, as evidenced by regulation-friendly cryptocurrency exchange Coinbase having reportedly inked a deal with a $20 billion hedge fund for its custodial solution.

  • “Web 3.0 Is Here”

If Web 1.0 introduced what Kelly described as a “global library,” followed by Web 2.0 comprised of global publishing across platforms like Google and Facebook, the Web 3.0 is the version for “global databank” in which “data can be monetized” via cryptocurrencies. As a result, institutional investors are looking to digital currencies as a play that is tied to their internet stock portfolio.

The other thing to consider is that some of the negative themes that were pressuring the bitcoin price in the first half of the year are over, such as the tax-selling phenomenon and major sellers such as the trustee of the shuttered Mt. Gox exchange. With these forces out of the way, the market is able to trade on positive industry developments, of which there is plenty of lately.

Featured image courtesy of Shutterstock.

Gerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.