The Bitcoin price made a comeback last week following the positive comments that were made by the U.S. Federal Reserve Chairman Jerome Powell who stated that the government did not have any plans to ban cryptocurrencies.
The comments were made when Powell appeared the House Financial Services Committee, where he intimated that he had no intentions of banning or limiting the use of cryptocurrencies.
Consequently, the digital currency rose by 11percent to attain $48,109.69 on October 1st, which happened to be a significant jump from the previous day’s figures. Crypto analysts note that the latest event represents the crypto’s highest performance in almost a month of low prices.
Although media reports have already attributed the recent Bitcoin rally to Powell’s remarks, a number of commentators believe that there was no obvious reason why the digital currency made the much-needed comeback.
Still, it is difficult to divorce the latest success from the U.S. government official’s statement. This in part due to the longstanding evidence that Bitcoin’s volatility is significantly influenced by thought leader sentiments – Elon Musk’s tweets alone have swung crypto prices from Bitcoin and other virtual coins.
Figure 1: one of Elon Musks pivotal tweets about Bitcoin (Source: Twitter)
Nonetheless, another likely explanation for the Bitcoin rally is the tradition where investors reset their portfolios at the beginning of every fourth quarter of the year.
Crypto Regulation is Bitcoin’s Greatest Enemy
We have seen in the past how mere threats by government agencies about crypto regulation have ravaged Bitcoin’s price. There has been longstanding suspense within the crypto investment community as evidenced by the erratic performance of the digital coin in response to such reports.
Case in point, China’s statement that all transactions involving crypto are illegal, including their decision to ban digital tokens, became a disaster for the Bitcoin price. Thanks to the incriminating verdict by one of the world’s largest Cryptocurrency markets, the price of Bitcoin fell more than $2,000.