Bitcoin has turned to a bull run today, up some $400 in just one day, from around $2,400 to a trading price of $2,800 at the time of publishing.
However, trading volumes have not picked up much, currently standing at $1.3 billion, near the same level they were three days ago when bitcoin briefly started moving in a sideways direction.
Around the same time as bitcoin’s price started to rise, Bitcoin Cash halved from ¥3,200 ($474) to a low of ¥1,600 ($237) to then recover, trading at a current price of ¥2,700 ($400).
It’s trading volumes have increased to more than $15 million, up from $10 million yesterday, suggesting strong support at lower prices. But is there a correlation between the two currencies?
It is too early to tell, not least because Bitcoin Cash does not actually exist yet, with its trading limited to futures until August 1st.
But the two have been observed to move in opposite directions, with bitcoin falling at times when Bitcoin Cash rises and vice versa. Like yesterday, when Bitcoin Cash seemingly fell while bitcoin started rising, until Bitcoin Cash begun rising too.
However, the likely reason for bitcoin’s rise probably affects Bitcoin Cash too. With the likely reason being, ironically, the shut down of BTC-e.
You’d think that would be pretty bad news for bitcoiners since some of them may have lost their funds, but the market is apparently seeing a silver lining in that considerable bitcoin supply may have been taken off the market, at least for now.
As such, if demand remains the same while supply is temporarily reduced, then price should rise, and it has indeed done so.
But it remains unclear who exactly has control over BTC-e’s assets, which may amount to some 560,000 btc, with the exchange likely holding litecoin, eth, and other digital currencies too.
Moreover, some 66,000 bitcoins, currently worth around $160 million, are on the move. The reason remains unknown, but the sum is not far off from a $110 million BTC-e fine by FinCEN.
Finally, if the above explanation for bitcoin’s price move is correct, then you’d expect eth and ltc to be up too as they also had supply taken off the market.
But both are strangely down today, not following bitcoin’s moves. Therefore, a more probable explanation may be that all eyes are turning to bitcoin, which is to undergo its first chain-split on August first.
As little appears to be happening in other digital currencies, traders and speculators might be flocking to bitcoin, both to get BCC and potentially to take part in the historical events that are to occur in just three days now.