Trading volumes, across the market for digital assets, experienced a resurgence last week as Bitcoin skyrocketed, gaining 15 per cent overnight and pushing over $4,500 for the first time this year. A sudden jolt in Bitcoin sent the world’s most popular cryptocurrency to the highest level since November, reviving the $160 billion market for digital assets after a sustained bear market run.
Developers and traders alike have struggled to identify the reasons for the rally. We have just about heard every possible angle — from a mystery $100m concerted order across three major exchanges to automatic short trade covering, and even an April Fools’ Day prank claiming that the Securities and Exchange Commission (SEC) was approving a Bitcoin Exchange Traded Fund (ETF). However, I believe the surge can be traced back to the tight trading range over several weeks which dictated a breakout either way, and a subsequent small move upwards which triggered a short squeeze. While any or all of these factors may have played a role in sparking the rally, now it’s a question of duration. What is interesting to see is that after 11 days the prices have sustained at a higher level and are creating a new tight range. Sudden swings in Bitcoin are nothing new, but this time it doesn’t seem to be a quick rise and fall.
The market’s susceptibility to wild price swings has been welcomed among speculators, who are yearning for a return to the heyday of December 17th, 2017 when Bitcoin peaked at $19,783. This extreme volatility is the very reason that institutional investors have continued to shirk crypto. For some of those investors, this price surge will most likely serve only to galvanise scepticism. But, we have to realise that it is only early days in the lifetime of crypto. The asset class is only a decade old, and it only started attracting mainstream attention five years ago. And, for better or worse, Bitcoin has made the headlines again, and a fresh flood of interest now eyes a slightly more mature digital asset market.
For many, after the neverending dreariness of the crypto winter, Spring seems to have finally sprung. From JP Morgan’s launch of the JPM Coin to Facebook’s cryptocurrency, Bitcoin and cryptocurrency sentiment has been boosted by a plethora of brands entering the space and lending mainstream credibility to the ecosystem, indicating to the wider public that it may have the longevity to live up to expectations. A bevy of bullish comments from some of the most closely-watched figures in the tech world – Tesla CEO Elon Musk and Twitter CEO Jack Dorsey – endorsing and hyping the technology haven’t hurt either.
But what does the future hold for the market? Are we headed for a repeat of the 2017 bull run? More and more voices within the community appear to be in agreement that the crypto market has ‘bottomed out’ and it’s only up from here. While it’s too soon to draw firm conclusions, we’re beginning to see some crowd wisdom indications of more optimistic investor sentiment. Fundamentally, over the long run, we will begin to see more bullish market movements as more projects in the blockchain space deliver working solutions and valuable technology. The mass adoption of blockchain is not far off, so take heart in it and keep watching.
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