Bitcoin makes the Huge Gains on the Rumor of Amazon AdoptionJuly 27, 2021
There is a fresh new dose of optimism in the crypto markets. This began with a solid phase of all major digital currencies that began last week, with bitcoin BTC token, as well as other cryptocurrencies, moving into the green zone. However, the end of the weekend saw that this state goes into overdrive on the rumor of a huge institutional adoption. The same period saw BTC trading briefly above 39,000 USD, while in some places, like Binance, the same token suddenly came to 48,000 USD. All of this is happening for the first time since last month, more precisely July 16. The cryptocurrency now also tied seven days of consecutive trading in the green.
The climb reached a small stall on early Monday, where Asian markets likely saw many surprised investors and traders take out their profits. But, the situation remains volatile towards a further climb in value. All of this is happening on the news that a big company – the biggest one in the retail domain – is looking to adopt bitcoin and possibly other digital currencies as a means of payment. That company is none other than Amazon and if the rumor is true, even in some contained and scaled-down form, it could be the turning point in the ongoing bearish period, but also much more than that for the long-term health of the crypto market.
The explosion of the price of bitcoin, which took that figure to over 40,000 USD during the final hours of Monday trading, did not come about only because of Amazon rumors. Instead, a process of short squeeze apparently also drove it further up. That included those who are betting on BTC to go down and their subsequent activity once they realized that the opposite is taking place. Many of the same traders quickly began to sell succession to do what they could to cover that eventuality.
Short sellers in the traditional stock market often do the same and quickly vacate their short bets so that they are not stuck in an unfortunate position. But, the same explains only a part of the recent increase in the value of bitcoin. It also underlined the quick and explosive positivity of the price sliding down, which also took place on the same day. So, the ultimate reasons for the same process of price rise and then its quick fall (in all crypto markets), like always, remain only partially clear.
Financial experts are also trying to establish other correlations as well. The price action in recent days, according to many of these, is aligning with other market forces, especially borrowing rates in this case. The same rates for the US dollar have begun their slow increase. In the previous months, they reached a very low point. Now, they are climbing up slowly and this is coinciding with traders taking on more action and investors placing further funds into cryptocurrencies.
The analysts are also pointing out that they are seeing much more demand for USDC from institutional borrowers in particular. The same synched perfectly with the news that the retail giant is planning to add its weights to the bitcoin network ecosystem. However, like it often happens in the domain of social media, esports, and similar digital and heavily populated environments, this rumor ultimately showed itself to be untrue, which stopped the strong rally in its track almost immediately, but also pulled down the price for around 10 percent or more across the board of the different cryptocurrencies.
The rumor began with a story in a mid-tier news outlet that used a single unconfirmed source that Amazon is working on accepting bitcoin payments before the end of 2021. The rumor also included a story about the same giant developing its own token. This digital currency, according to the source, should be ready by the end of next year. The entire story came about from a free city paper in London UK. There, the same publication is distributed in public places, so it is not that easy to take it as a very credible source. Yet, the same thing is exactly what so many people decided to do, including traders and investors, who acted on the same news with some conviction.
This comes on the back of the news that Amazon is seeking digital currency and blockchain employees. Previously, it was widely reported that Amazon wants to hire a team lead in the domain of digital currency and blockchain. So, the rumor fits snugly with the same news. However, Amazon was at first not available for any comment on this issue. Some hours later, it did come out with a statement which sadly for the crypto market, shut the whole thing down very rapidly.
No Blockchain Development
A spokesperson from Amazon came out with a statement where the company denied that it is interested in either accepting existing cryptocurrencies or developing any of its own. The article from the same news outlet mentioned Amazon’s interest in space, which the company confirmed. However, it united the same from any notion of digital currencies.
While the e-commerce giant is interested in general in novel technologies and expanding the user experience for their customers, that in no way directly involves cryptocurrencies like bitcoin. So, while the rumor might have been the perfect fuel for a bullish outbreak, the same fuel did not have the longevity to make it into a trend. Instead, the markets correct themselves in a matter of hours, bringing the price down substantially and erasing almost all advancements that the rumors made.
The environment in which all of this took place is not that unusual for supporting a rumor and quick response like this one. In previous weeks, many prominent business leaders talked in a positive light about digital currency. These appeared mostly at the Bitcoin Conference. Jack Dorsey, the CEO of Twitter and a long-time supporter of bitcoin, once again reinstated his interest and understanding of the same technology.
Elon Musk, who was one of the key individuals for the last major drop in BTC prices, said that Tesla Motors might again begin accepting crypto. He also revealed that his other company, SpaceX, is also holding digital currencies. In that environment, it is not unimaginable to see how a rumor involving Jeff Bezos and his Amazon might explode in the crypto public.