As made abundantly clear by derivatives data, there were many market participants caught off guard by Bitcoins ongoing rally. In fact, in the past week alone, reports indicate that there was in excess of $1 billion worth of short positions liquidated on margin platforms like BitMEX.
Bitcoin rallying 20% in a week, after all, is quite the accomplishment — even for the cryptocurrency.
BTC Chart from TradingView.com
Even more confusing is what caused this rally. According to Cameron Winklevoss, the Bitcoin billionaire that co-founded Gemini with his twin brother Tyler, there are two trends behind this rally. And they may be more obvious than some may think.
The 2 Factors Behind Bitcoin and Ethereums Ongoing Boom
In a tweet published on August 1st, Cameron Winkelvoss suggested that the ongoing cryptocurrency market rally is driven by two catalysts:
- Bitcoin becoming a hedge against inflationary risks, triggered by money printing by central banks and governments.
- Ethereum undergoing an influx of adoption and demand spurred by growth in the decentralized finance (DeFi) cryptocurrency segment.
— Cameron Winklevoss (@winklevoss) August 1, 2020
The former narrative is something that Paul Tudor Jones, a billionaire hedge fund manager, has latched on to.
Jones said in a May research note and in a CNBC interview that he is allocating 1-2% of his portfolio to Bitcoin to hedge against inflation risks.
The latter narrative is one that is contested. Some commentators argue that DeFi seeing an uptick in innovation and adoption isnt a sure-fire catalyst to push demand for cryptocurrencies higher. Others say that it is the foremost catalyst behind Ethereums 50% rally in the past seven days.
What Will Drive BTC in the Long Ru ...