Who's Buying Bitcoin? Demand Persists Amid Fork Fears

Bitcoin demand remains strong in spite of concerns that the bitcoin network might split.

AccessTimeIconMar 22, 2017 at 9:40 p.m. UTC
Updated Sep 14, 2021 at 1:57 p.m. UTC
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In spite of speculation the bitcoin network could split into two separate blockchains, demand for the digital currency continued to remain strong during today's trading session.

The digital currency has mostly been trading north of $1,000 today, dipping below but rebounding shortly after, according to the CoinDesk Bitcoin Price Index (BPI). Further, volumes at two of the world's largest exchanges, Bitfinex and Kraken, were robust, with figures charting higher than the 30-day average.

Yet, given the possibility that the network could see significant turbulence in the event of technical schism, some market observers were left openly wondering why bitcoin prices were still high.

At the time of report, bitcoin was trading at $1,005.29, 20% below its all-time high, but up 142% year-over-year.

So, who's purchasing the digital currency and propping up its price? Some analysts were left stumped.

Jacob Eliosoff, a cryptocurrency fund manager, told CoinDesk:

"All we can say for sure is that someone is buying to keep the price as high as it is."

Possible variables

As for what has been fueling bitcoin's sustained demand, other market analysts offered varying explanations, most of which revolved around speculation and uncertainty.

Some traders may be trying to buy the dip, as bitcoin prices have fallen, and observers reasoned this means there's the possibility of gain.

Charles Hayter, founder and CEO of exchange service CryptoCompare, told CoinDesk that while traders are "skittish", there will always be people "trying to catch the bottom" when prices decline.

Petar Zivkovski, COO of leveraged cryptocurrency trading platform Whaleclub, provided similar sentiment.

"Most of the buying going on is speculative, as far as we can tell, going after short-term profits, opening and closing trades within a day to minimize exposure on this uncertain market environment," he said.

Harry Yeh, managing partner of investment manager Binary Financial, suggested short sellers may be playing a key role in keeping bitcoin prices at their current level.

"Lots of people were short, and they have been covering their shorts (ie buying)," he speculated.

Others, he said, might simply be caught on the wrong side of what could be an impending correction.

He told CoinDesk

"This recent bounce is a dead cat bounce, and it's a bull trap."

Perseverance concept via Shutterstock

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


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