Bitcoin’s Strong Rally Comes from Supply Deficiency or Speculation?

Bitcoin has broken through $30,000 and $40,000 in concession amid its recent strong uptrend, which also draws a number of interests from all walks in the market.

Analysts believe Bitcoin’s uptrend came from a couple of factors including institutional investors’ entry and abundant funds from the global financial market.

However, an obvious dispute on Bitcoin’s future move shows among participants.

Part of them believes this bull run is different from the former ones which dropped after the strong uptrend. This round comes from the supply deficiency and will continue to surge higher.

SkyBridge Capital’s co-founder Anthony Scaramucci and CEO Brett S. Messing released an article noting that as per the basic regulations of Bitcoin, currently there are 900 Bitcoins newly mint per day, however, the demand is largely higher than supply. If the deficiency expands, Bitcoin will go higher.

Douglas Borthwick, Chief Marketing and Business of U.S.-based crypto exchange INX, noted institutional investors have flooded billions of dollars in the cryptocurrency market, the biggest reason for the surging price.

As JP Morgan estimated, there is a huge surging room for Bitcoin to surge for the long run owing to Bitcoin’s alternative feature against gold.

However, some noted market speculation is the major reason to drive cryptocurrencies like Bitcoin to experience a large surge, while some held that Bitcoin has entered into the bubble range so that the market will meet a great slump.

Mark Cuban, the famous American investor, recently said, the current stage of cryptocurrency trading is similar to the internet bubble regardless of how the price surging. And some always try to testify its authenticity.

Eswar S. Prasad, professor at Cornell University, noted Bitcoin is completely dependent on investors’ confidence. If 10% of holders choose to sell out, Bitcoin will no doubt slump to zero in the following day.

Nouriel Roubini, professor at Leonard N. Stern School of Business of New York University, is not optimistic about Bitcoin’s prospect. He noted Bitcoin is not a kind of currency, charge unit, or payment, without any feature of storing value. Meanwhile, Bitcoin is not an asset since it lacks inner value as well as usage value and can not bring any profits

Roubini believes, Bitcoin’s uptrend is triggered by speculation, “it seems to be the time for the bubble to burst.”

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Originally published at https://en.icointime.com on January 15, 2021.