The Regain of Bitcoin, Will It Be Strong Enough?
We’re at the start of a new week with the price back at $1,000 after suffering another drop due to concerns of tighter trading policies introduced by China’s largest Bitcoin exchanges. After a panic wave hit the market on Thursday, it seemed that losses were imminent, but once again the cryptocurrency was able to gain momentum and jump back to the $1,000 mark.
Considering the speed with which it has been recovering in the past months, some financial experts have voiced their optimism about Bitcoin finally setting on a path to better value and stability. This path, according to Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co, will likely see Bitcoins catapult into a bubble territory where they will trade close to the $25,000 range.
As the Yahoo Finance analysis states, Bitcoin is showing the same signs like past financial bubbles, and is likely to become appealing to hard asset investors in the long run. The reason, as Lamoureux puts it, is because the cryptocurrency is becoming more ubiquitous and legitimate, a trend that regulatory pressure will only further boost.
Bitcoin Traded at Low Volume; Sellers Take Over
Since our last update on Friday, the price of Bitcoin saw a stable climb from the $960 mark it moved around that day to around $1,000. The highest point was on Saturday, when it reached $1,006.81, after which it has struggled to find support at the 1K level.
The market has become quiet since the panic wave on Friday, with the trading volume going on a gradual decline to the current $61,179,900, a trend which the market cap followed down to $16.2 billion.
Our technical analysis shows that the market is currently pro-sell, with some buyer pressure still left. Out of 12 moving averages, all 12 are showing a selling signal, with 6 out of 12 oscillators sending the same conclusion. The SMA 100 is still safely over the long-term SMA 200, so there is less resistance to the upside, although the overall selling mood will surely reflect on the price.
There is very little buyer pressure left at this moment, which will likely see the price test $980, unless buyers regroup. However, as has been in the past days, this might be a temporary swing, so keep your eyes on market.
Is Bitcoin Becoming Stronger?
One thought that has been on everyone’s mind in the past month is that Bitcoin isn’t behaving as it was before. Where previous China-related price drops were seen as a strong reason to panic, now things are looking quite different.
Namely, according to a recent insight by Bloomberg, Bitcoin price swings triggered by the PBOC are less severe than three years ago, when the cryptocurrency was exhibiting more drastic volatility. Looking back at PBOC’s intervening in 2013, the BTC price dropped down from the $1.1K range by half in the course of one week, only to recover by over 70% and drop back down to end up to $180 by 2015.
But now, Chinese regulatory pressure is resulting in less violent price swings, as we have seen since the beginning of January. Thus far, the lowest the price dropped was around $300, while in the past week or two this was more close to $120, with the swings becoming less severe each time and the recoveries faster.
Thus, recent behavior has lead many to conclude that Bitcoin is entering a stronger phase that would see it less dependent on Chinese regulations and more on global interest. The reason, according to Bloomberg, is thanks to a broader circulation, bigger volume, and deeper market.