Bitcoin’s Price Surges as Demand and Network Efficiency Grow

This week the price of bitcoin rose significantly, from $8,750 on May 25 to a weekly high close to $9,800, potentially testing a move toward the $10,000 mark. At press time, the cryptocurrency’s price is holding above $9,500.

Ether, the second-largest cryptocurrency by market capitalization, also went up over the week, going from $201 to $237 at press time, after touching a weekly high of $245. Cryptoassets across the board saw price rises as demand seems to be growing.

This new dynamic became evident after it was revealed cryptocurrency asset manager Grayscale Investment has been buying around one-third of all newly minted bitcoins, as new data showed it has been purchasing roughly $30 million worth of the cryptocurrency every week.

After a Reddit user crunched the numbers, they found Grayscale’s Bitcoin Investment Trust (GBTC), a trust that allows investors to gain exposure to BTC without actually managing any private keys, has added more than 60,000 BTC to its holdings over a 100-day period. Over the same period last year, its average weekly investment was just $3.2 million. GBTC is often a preferred product for institutional investors, and Grayscale offers funds that cover other top cryptoassets including ETH, BCH, ZEC, XRP, and more.

Grayscale saw record inflows of $500 million in the first quarter of this year, after nearly doubling its previous high of $354.8 million in Q3 2019. As demand keeps growing, it appears it could break the record again in Q2 2020.

Last week also saw Australian investment app Raiz Invest announce the launch of a new portfolio with a 5% allocation to the flagship cryptocurrency. Its new Sapphire portfolio was reportedly under development for 18 months, and couples the cryptocurrency allocation with positions in ““US, Australian, European, and Asian large-cap stocks, as well as the Australian corporate debt and money markets, all via exchange-traded funds (ETFs).”

Demand for the second-largest cryptocurrency, ETH, has also been on the rise as Garry Tan, a Venture Capitalist who invested in popular crypto exchange Coinbase, revealed on social media he is now accumulating ether.

Bitcoin billionaires Tyler and Cameron Winklevoss have also revealed in an interview with The Defiant that they own a substantial amount of ether, in addition to their BTC fortune. The twins revealed a “couple of years back” they made a “concerted effort to buy a lot of ether.”

Exchange Help Bitcoin’s Network Progress

Over the week several headlines made it clear cryptocurrency exchanges are working to improve the Bitcoin network by doing their part in reducing congestion and reducing transaction fees as a result. San Francisco-based Coinbase activated several improvements, including unified top-ups and transaction estimated time of arrivals to ease users’ concerns when transaction crypto.

To reduce congestion, Coinbase also added transaction batching which significantly reduces transaction fees, by grouping multiple transactions into one. The practice has been criticised by some, as it allows blockchain sleuths to understand several addresses are customers of a specific exchange.

Kraken, another popular bitcoin exchange, also revealed it’s working to add support for Bitcoin’s Lightning Network later this year. The Lightning Network is an off-chain scaling solution that lets users lock their BTC in channels and transact off of the Bitcoin blockchain with these funds. 

Responding to a user on social media, Kraken’s Bitcoin strategist Pierre Rochard was confident support for the Lightning Network would be added this year:

Other notable news last week includes Facebook’s digital wallet subsidiary Calibra rebranding to Novi. The company’s announcement released a few details on how Libra will work in its integration with WhatsApp and Messenger, both platforms owned by Facebook itself.

In a FAQ section, Novi revealed that there will be minimal to no transaction fees – with one of its answers explaining that “what you send is what they get,” before adding users won’t have to worry about hidden charges. Novi concludes it is “cutting fees to help people keep more of their money.” During a shareholder meeting, Facebook CEO Mark Zuckerberg revealed the Libra crypto project may help Facebook’s ad revenue grow by driving up demand.

Featured image via Unsplash.