Bitcoin reached above $48,500 on August 14, the highest it has been since May 16. This price point means a gain of 290% year-on-year, which came to 644% for Ether and 1,431% for newly minted third place Cardano. Meanwhile, meme-crypto Dogecoin is up 9,157 year-on-year, according to CoinGecko data.
However, behind the recent moves is a resurgence in interest from individual retail investors. According to the Wall Street Journal they have returned after “after cryptocurrencies received a jolt of momentum in late July.”
“A jolt of momentum”
What else could have catalyzed such a dramatic movement for Bitcoin but another statement from Tesla CEO Elon Musk? At “The B Word” conference co-hosted by the Crypto Council for Innovation, Musk said he and his other company, SpaceX, held bitcoin. That same week, Amazon listed a new job posting seeking an expert in digital currency and blockchain, generating further buzz.
Spot trading volume of cryptocurrencies also increased sharply around that time on major exchanges including Binance, Kraken, Coinbase, and Gemini, according to Coin Metrics. Although some of that volume could include some institutional buying, “in all likelihood most of the exchange spot volume is retail,” said CoinMetrics senior research analyst Nate Maddrey.
Apart from volume, other signs are indicative of retail investor activity. For instance, besides Bitcoin, the prices of altcoins have surged recently. As professional investors tend not to trade in the altcoin space, according to cryptocurrency analysts, it is a sign that retail investors are active. This is because they are seeking cheaper digital assets with small market capitalization that have a greater potential for larger gains.
In addition to these events occurring, the recent surge can also be attributed to the relocation of Chinese cryptocurrency miners. Bitcoin mining difficulty spiked to 15.55 terahash in light of those in China settling in more crypto-friendly climates. In a sense, a higher Bitcoin mining difficulty represents higher overall hashpower miners are contributing.
According to the most recent data from BTC.com, Bitcoin mining difficulty’s recent spike began on July 17. Since then, the Bitcoin ecosystem has witnessed a 13.77% increase in mining difficulty in two consecutive jumps. While formerly contributed three-quarters to the global hashrate, China’s contribution has reduced to nearly 46%, according to data from Statista. Several countries have picked up the slack, with the United States hosting almost 17% of the global mining hashrate.