Bitcoin is plagued by a fork crisis but demand remains strong. Who is buying it?

Despite speculation that the Bitcoin network may split into two separate blockchains, demand for the digital currency continues to remain strong.

According to Coindesk BPI, Bitcoin is trading around $1,000 today, having once fallen below $1,000 before rebounding. In addition, Bitcoin trading volumes on major global Bitcoin exchanges Bitfinex and Kraken are also very strong, higher than the 30-day average.

However, given the potential for significant turbulence the bitcoin network would face in the event of a technical split, some market observers are curious as to why the price of bitcoin remains so high.

As of press time, Bitcoin is trading at $1,005.29, 20% below its all-time high but 142% higher than the same period last year.

So who is buying Bitcoin to support its price? Some analysts are confused.

Jacob Eliosoff, a cryptocurrency fund manager, told CoinDesk:

“We can definitely say that there are people buying in large quantities to support the price of Bitcoin.”

Possible variables

As for what exactly is fueling continued demand for Bitcoin, other market analysts offer a variety of explanations, most involving speculation and uncertainty.

Some traders may be trying to buy in because the price of Bitcoin has fallen, which observers believe means there is a chance that the price of Bitcoin will rise.

Charles Hayter, CEO and founder of CryptoCompare exchange service, told CoinDesk that consumers are ‘emotionally vulnerable’ and will always try to ‘grab the lowest price’ when prices drop.

Petar Zivkovski, COO of leveraged cryptocurrency trading platform Whaleclub, gave a similar view.

He said:

“From what we know, most of the current buying activity is speculative, chasing short-term profits, and most of them buy and sell within a day to minimize their exposure to uncertain market conditions.

Harry Yeh, managing partner at Binary Financial investment firm, said short sellers could play a key role in Bitcoin maintaining current price levels.

Yeh speculated:

“A lot of people are short-term investors who are shorting Bitcoin (buying Bitcoin).”

Others, he added, might just be on the wrong side of an impending price correction.

He told CoinDesk:

“The recent price rebound was a dead cat bounce, which is a bear trap.”