Bitcoin has typically been regarded as risky, said Dan Held, co-founder of Interchange, a company that advises businesses on how to manage their crypto assets. But he said the currency’s resurgence might be the first inkling that it holds weight as a “risk off” trade — an investment treated as a safer bet when markets are tumultuous, like bonds or gold. After all, the currency skyrocketed in value Monday when the Dow plunged 617 points, perhaps suggesting that investors turned to bitcoin as a safe haven asset.
“It’s bitcoin’s moment to shine when people momentarily give up on the government or the banking system,” Held added.
That could have been because Monday’s bitcoin trading frenzy spurred additional investor interest, said James Putra, head of product strategy at brokerage firm TradeStation Crypto.
“When the market started to rise, it drew more people in,” Putra said. “Larger players started to take bites out of the marketplace; it’s a common and familiar approach.”
“Manipulation could very well be behind the recent market moves. To act like bitcoin and crypto currency prices are purely driven by supply and demand of little traders … ignores the specific mechanics of this marketplace,” said John Griffin, a finance professor at the University of Texas at Austin and one half of the duo that penned the paper on price manipulation last year.
“It would not be a stretch nor surprising to find that manipulative activity is behind the recent runup when the underlying market mechanics are similar to before,” Griffin added.
Griffin isn’t the only one with that suspicion.
“I don’t think anyone really knows what this is due to,” said Tim Massad, former chairman of the US Commodity Futures Trading Commission, speaking about the latest rally. “But you worry that manipulation could be a contributing factor given the lack of regulation and transparency in this market compared to other markets.”
Massad said he lauded the Securities and Exchange Commission for stepping up oversight of cryptocurrency, but added that “you still have gaps in regulation.”
Another, simpler explanation for the price rise: It’s Blockchain Week, an unofficial holiday for bitcoin. The event, which is also called Consensus 2019, draws in more buyers for bitcoin and other major currencies, according to Lennon Sweeting, the director and head trader of Coinsquare, a Canadian cryptocurrency trading platform.
All of that could make the digital currency and its technology appear more credible to investors. And it gives bitcoin’s backers a reason to remain optimistic.
“The $10,000 mark remains firmly in sight over the coming months,” said Vaibhav Kadikar, founder and CEO of a decentralized prediction market platform, CloseCross. “And the possibility of surpassing the previous high in the coming half year still remains.”
— CNN Business’ Anneken Tappe and Paul La Monica contributed to this report.