Bitcoin has definitely seen better days in the last couple of months. The cryptocurrency has recently been trading at around $7,500, while fluctuating up and down along the way. Today, however, the cryptocurrency jumped with almost 17%, now trading at around $8,000.
Source: Coinbase, 2018
Many are wondering why the currency jumped with such a high percentage in a single day. The rise put a smile on hodlers’ faces while traders betting against the cryptocurrency had to buy back to cut their loses.
The shorts were not so successful this week with the continuing increase in the digital currency’s price. In addition, some analysts believe that once shorts were forced out, the price got even higher, as liquidity and demand went both up.
Another major concern for bitcoin traders and investors are the taxes. The US is currently imposing tax regulations on bitcoin, since the digital currency is now considered an “asset” that needs to be taxed. According to a press release in UK Express, the US, overall, may be owing up to $25 billion in capital gains from holding bitcoin.
While the new tax system may be holding some people “tense” about their bitcoin holdings, the innovation behind the people’s currency is going full speed ahead. The Bitcoin community is now working on making the currency more efficient and cost-wise when it comes to transactions. Bitcoin has been deemed to be of “holding value” more than of “transactional” one, meaning that it is better to have the currency as a store of value, like gold, and not use it as fiat money to transact on a daily basis. This notion is now changing, and the blockchain improvements are only going to reinforce Bitcoin’s position in the future.
So, the major reason for the uptick in the price today may be owing to investors who believe in the improved back-end of Bitcoin. With that, while not a reason, but certainly a support factor for the Bitcoin’s price increase, were the short-sellers who bought back in once the price started climbing.
It is a matter of time to see how the tax system, as well as the improvements in the blockchain technology will affect Bitcoin in the very near future.