Bitcoin’s price surge may be driven as much by a drying up in supply as by an increase in demand.
That’s because Chinese miners are struggling to sell their crypto in ways that would quickly get them much-needed cash in the face of a government crackdown on local exchanges.
“The lack of supply has fed extremely well to the trendiness of this rally, without any of the large sell-downs typical of miner activity in the past,” Singapore-based trading firm QCP Capital noted in its Telegram channel.
QCP’s interpretation of the rally is simpler and less exciting than some of the other popular explanations, which cite macro factors such as demand for a hedge against monetary and fiscal indiscipline, an impending rise in inflation across the developed world, and search for yield as primary reasons for the price surge.
Miners mostly operate using cash and offload their bitcoin holdings onto the market almost daily