As made abundantly clear by derivatives data, there were many market participants caught off guard by Bitcoin’s ongoing rally. In fact, in the past week alone, reports indicate that there was in excess of $1 billion worth of short positions liquidated on margin platforms like BitMEX.
Bitcoin rallying 20% in a week, after all, is quite the accomplishment — even for the cryptocurrency.
BTC Chart from TradingView.com
Even more confusing is what caused this rally. According to Cameron Winklevoss, the Bitcoin billionaire that co-founded Gemini with his twin brother Tyler, there are two trends behind this rally. And they may be more obvious than some may think.
The 2 Factors Behind Bitcoin and Ethereum’s Ongoing Boom
In a tweet published on August 1st, Cameron Winkelvoss suggested that the ongoing cryptocurrency market rally is driven by two catalysts:
The former narrative is something that Paul Tudor Jones, a billionaire hedge fund manager, has latched on to.
Jones said in a May research note and in a CNBC interview that he is allocating 1-2% of his portfolio to Bitcoin to hedge against inflation risks.
The latter narrative is one that is contested. Some commentators argue that DeFi seeing an uptick in innovation and adoption isn’t a sure-fire catalyst to push demand for cryptocurrencies higher. Others say that it is the foremost catalyst behind Ethereum’s 50% rally in the past seven days.
Related Reading: Coinbase Takes DeFi Focus as it Looks to List 19 New Crypto Assets
What Will Drive BTC in the Long Run?
While Bitcoin is currently being pushed higher by the aforementioned two trends, it’s worth asking what will drive demand for BTC in the long run.
Fidelity Investments, the $2 trillion Wall Street asset manager, attempted to answer this question in a recent report.
The report, published late last week, mentioned five things that will likely drive long-term demand for Bitcoin. They are as follows:
Related Reading: Unexpected Factor That Suppressed BTC Bulls in 2019 Is Now Gone
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com These 2 Factors Are Behind Bitcoin's 20% Eruption Higher: Industry Executive
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