This week has proven positive for the price of Bitcoin, with its value rising above $8,400 yesterday. Yet, according to one survey, this is down to crowd psychology.
Playing the Role of a Sheep
Lately, there has been much improvement within the cryptocurrency market. Over the past seven days, Bitcoin has experienced a near 11 percent rise. At the time of publishing, it’s trading at $8,201.77, according to CoinMarketCap. However, yesterday it rose to $8,424.
There is plenty of positive indicators that are pushing its market price up. These include a proposed Bitcoin ETF and increasing institutional investor interest.
Interestingly, though, according to one study, it’s actually crowd psychology that is driving Bitcoin’s price up, reports MarketWatch.
The recent research was undertaken by DataTrek, a company that provides daily guides to markets, data, and disruption. It surveyed 216 people, with 52 percent of them indicating that crowd psychology was the main reason.
Nicholas Colas, co-founder of DataTrek Research, said that this was “single most surprising response” of the survey. He added:
Finance professionals make their livings by analyzing asset values through the lens of fundamental/quantifiable factors. That more than half of respondents believe valuation in the crypto space is “purely a function of crowd psychology” is refreshing in its honesty.
Compared to that, only 15 percent said that the value of Bitcoin was due to increasing usage. A further 38 percent stated that it wouldn’t become a global reserve asset.
Institutional Investor Interest on the Rise
The fact that 38 percent found the issue of holding and reserving digital currencies an issue is not being felt everywhere.
Last week, Adam White, the vice president and general manager at crypto exchange Coinbase, said that conversations among institutional investors regarding digital currencies were becoming “more profound.” The exchange has also launched its Custody service, designed to allow institutions in the U.S. and abroad to store their crypto assets.
It’s hoped that this will draw more money into the space, helping to boost market prices up.
However, regardless of whether this brings in more money, advocates are still confident about where it’s heading. Just yesterday, Anthony “Pomp” Pompliano, founder and partner at VC firm Morgan Creek Digital Assets, said he was sticking to his $50,000 price target for Bitcoin for the end of the year.
Do you think Bitcoin’s price is the result of crowd psychology? Let us know in the comments below.
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Author: Rebecca Campbell