Bitcoin Surge Due to Maturation of Asset
According to alternative data service provider Indexica, the reason for the recent surge in Bitcoin’s price, where it gained more than 28% in the last one month, can be attributed to the fact that the digital assets has now come of age. In other words, the asset as matured.
Findings of Indexica’s Analysis
Indexica developed a custom index that was based on the natural language processing of textual documents in an effort to explain why the price of Bitcoin was now gaining momentum.
According to the web intelligence platform’s research report, three major drivers are responsible for the digital asset’s growth. These drivers are: more complex and mature conversations around Bitcoin, a shift in how Bitcoin is being spoken about in terms of the past and the future, and fewer worries about fraud.
The first finding suggests that more financial professionals as well as academicians are talking about Bitcoin and that institutions are also taking the asset more seriously. In fact, there are reports that Fidelity Investments is going to start trading Bitcoin for institutional customers in the near future.
The second finding – about how the tense of the conversation on Bitcoin has changed in the last one month. This can be translated as futurity. Futurity is a measure that shows how discussions are moving from what is going to happen rather than what has already taken place. And this is the first time that this point as shown up as a driver for a major digital asset’s price movement.
The Chief Executive Officer of Indexica, Zak Salbert states that the futurity observed in Bitcoin is normal and is a feature that is frequently observed in stocks. Salbert states that this characteristic also is indicative of positive price movements in the future.
Maturing Market
The Chief Executive Officer of the cryptocurrency exchange ShapeShift, Erik Voohees also spoke in support of Bitcoin. He stated that the extreme volatility that had been seen in Bitcoin as well as other cryptocurrencies is the last few years was a necessary part of a nascent market. He said that bubbles were an integral part of an industry’s growth.
The surge in Bitcoin’s price also impacted the futures markets, with CME Group, the leading derivatives marketplace, reporting record trading volumes on its Bitcoin Futures on May 13. The company reported trading to an equivalent of 168,000 BTC (~$1.35 billion), which was a nearly 50% increase on the previous high reported on April 4.