The price of Bitcoin surged to its highest level in six weeks, with some investors attributing the rise to expectations that Amazon will accept digital currencies. Bitcoin rose to $40,501.70, according to Dow Jones market data, marking its highest point since mid-June. The competing currency, Ether, also jumped by 4.8%.
Supporters of the currencies have reported that the recent momentum in Bitcoin from prominent cryptocurrency advocates has helped support price gains. Last week, Elon Musk, the CEO of Tesla Motors, stated that his company SpaceX holds Bitcoin, despite concerns about its environmental impact. Musk also mentioned that he personally owns Bitcoin and that Tesla might accept the cryptocurrency again for purchasing electric cars.
Bobby Lee, founder and CEO of Ballet, a cryptocurrency hardware wallet, noted, “There has been a lack of good news in the cryptocurrency market over the past two months, and now news is starting to emerge, so investors and speculators are using this opportunity to build their positions and buy back Bitcoin, significantly raising the price.”
Despite this rise, Bitcoin remains about 40% below its all-time high of $65,000 reached in mid-April. In the following month, renewed efforts by China to crack down on Bitcoin mining and trading contributed to sharp price declines. However, in recent days, expectations regarding Amazon’s possible plans for cryptocurrencies and related technologies have grown after the company posted a vacancy on July 22 for a digital currency and blockchain expert.
Amazon, the online retail and cloud services giant, stated that the individual joining its Seattle payments team would be responsible for developing Amazon's digital currency, blockchain strategy, and product roadmap, leading to interactions among users and investors online, suggesting that the company might eventually enable transactions in cryptocurrencies.
In this context, many cryptocurrency exchanges empower users to bet on price declines by entering sell trades in margin trading accounts, much like stocks. Traders do this by borrowing cryptocurrencies like Bitcoin—sometimes with leverage or borrowed funds—and selling them before buying back at a lower price to repay the lenders.
Bobby Lee explained, “When prices jump unexpectedly—especially with cryptocurrencies, where there is a significant amount of futures and other derivative trading—it reveals traders with short positions, resulting in what's known as short squeezes that elevate the price.”
Claire Wilson, a partner at Singapore-based consulting firm Holland & Marie, mentioned that volatility in the cryptocurrency market, driven by a variety of factors, is not new. She added, “In recent months, massive price fluctuations have often been linked to comments from prominent figures on social media.”
Bitcoin’s rise might also be supported by long-term holders who have added to their positions, as the cryptocurrency has recently declined, according to data from Glassnode Research. Noel Acheson, head of market strategy at cryptocurrency lender Genesis Trading, stated, “This indicates that long-term holders' conviction remains strong.”
