BitMEX recently faced major U.S. legal action, and KuCoin suffered a significant hack, all inside a several-day span — but why did these events not affect Bitcoin’s price in a more negative way? Aleks Svetski, CEO of Bitcoin investment app Amber, said it has to do with a number of factors, including big players buying Bitcoin (BTC).
“Bitcoin’s price is a function of global demand vs a strict, immutable supply and diminishing schedule,” he told Cointelegraph, referring to the asset’s coin supply and mining payout halvings.
“As more people, especially large scale organisations look to acquire some, it creates not only a price floor, but continues to increase upward price pressure,” he explained adding, “and finally, these new players are all holding their Bitcoin OFF exchanges, and thus it’s not available for sale on the market.”
Over the course of 2020, a number of big players have publicized hefty Bitcoin purchases, including MicroStrategy, Paul Tudor Jones, and Square.
In contrast to the bullish action, crypto exchange KuCoin suffered a hack totaling more than $100 million in theft. Several days later, U.S. government authorities hit major crypto derivatives exchange BitMEX with legal action, arresting one of its leaders.
Neither of these events caused Bitcoin to fall into a downtrend, however. Bitcoin did not fall significantly on the KuCoin news, and only fell several hundred dollars on the BitMEX news — a relatively small reaction to a significant news event. In contrast, after sideways price action for a number of days, the asset began its journey upward out of levels of consolidation. Svetski added:
“This is setting for an extraordinary run and no exchange hack, stimulus delay or state policy will be able to to hold it back.”