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This question comes in from Doctor Bitcoin chatroom participant Ife Olaore: “What’s driving the market right now?”

I’m always asked basic variations on the question “Why do bitcoin’s price be like it be?” Most of the time this is a yawn of a question, but the conditions that resulting in this runup in price are actually pretty interesting.

In general, you’ve got a couple things that forced illiquidity on the market: the Bitfinex/Tether thing, and the Binance hack (both of those linked articles are by Duncan Riley, who does a great job of investigating the underbelly of the world of crypto and blockchain).

You’re talking about two of the most used places to trade bitcoin, and together they constitute a large plurality of the general marketcap of crypto.

Bitfinex was seeing, in effect, a bank run, and due to the fact that folks didn’t trust Tether due to the news cycle, they were running up the price of Bitcoin on Bitfinex. How? They were cashing in their (to them, worthless) Tether at market rate for Bitcoin, and then withdrawing the Bitcoin offsite. and waiting for the price of BTC to catch up elsewhere before they cashed out (so they wouldn’t lose money). This activity continues; even through yesterday, whale monitors saw transfers as large as 45,000 Bitcoin leave Bitfinex.

Between Bitfinex and Binance, you’re talking about two of the most used places to trade Bitcoin, and together they constitute a large plurality of the general marketcap and trading volume of crypto.

Simultaneous to the Bitfinex / Tether situation, you had the hack at Binance, which cause a freeze on withdraws for Bitcoin. That means people could trade, but they couldn’t withdraw (although presumably they could deposit other cryptos and liquidate to Bitcoin that they couldn’t withdraw).

This has the net effect of driving up the price of BTC on both sites.

Normally, when these things happen at exchanges, they don’t matter, and the general market continues as it would. But because Binance and Bitfinex constitute such a large percentage of daily volume of crypto trading, it drove a FOMO cycle, causing the price to rise elsewhere.

Based on what I’m seeing, that cycle may be cooling a bit, but time will tell. It could be a pause before another runup, or it could be just my limited sample set of data. When I started working on this post (and when we were talking about it in the chat room), the price was still well north of $8000 for Bitcoin. A couple of large sales went through, bouncing the price a little and cooling off the bull run, but most of the technical analysts still see us well in