Bitcoin, the top cryptocurrency by market capitalization has hit a new yearly high of $8,858.53. It’s market capitalization has also surged to $155 billion which gives it a 57.4 percent dominance of the entire market share. On the other hand, the total market capitalization of cryptocurrencies is currently $271 billion and a closer look at charts shows that a $25 billion increment occurred within the space of 24 hours.
But what has led to this sudden price movement given that the market has experienced a downtrend for over a year now? Did the months of April and May come with good tidings and can the same impressive performance be expected in the remaining months of the year? No one can give an outright yes or no, but here’s what we can tell you!
Bitcoin Spikes Despite Recent Events in the Crypto Space
Bitcoin has received a wakeup call which it was in dire need of and this can be attributed to a number of events that have occurred of recent. For starters, the lawsuit against Bitfinex and Tether, companies that oversee the Tether stablecoin (USDT) have been unable to bring down the price of Bitcoin. This is in the face on an allegation that Bitfinex had tried to cover an $850 million loss of client and corporate funds.
In the same vein, Binance, a crypto exchange was recently hacked and Changpeng Zhao, the exchange’s CEO discussed with the public if the Bitcoin blockchain should be reversed in a bid to get back the exchange’s stolen $40 million worth of funds. However, changing his mind to proceed with the rollback has given Bitcoin another edge in its price.
Lest we forget, the U.S. Securities and Exchange Commission on March 29, 2019, also postponed its decision to either approve or reject two Bitcoin ETFs and unlike the past, it was not enough to deter people’s interest in Bitcoin. What these events show is that generally, the market has matured in comparison to the past where news about hacks (e.g MT. Gox in 2014) or regulations was able to significantly bring down Bitcoin’s price.
Asides from these, there’s also the planned May 2020 Bitcoin halving where the number of Bitcoins that are created every 10 minutes will be reduced from 12.5 BTC to 6.25 BTC. It may have directly or indirectly impacted on the virtual asset’s price since each halving usually triggered an increment in price. The latter was the case in November 2012’s ($12.22 per BTC) and July 2016’s ($657 per BTC) halvings.
Moreover, the $8,000 price level may not be the best of its kind for the year if we rely on predictions from reputable members of the crypto industry. Let’s take the case of Arthur Hayes, CEO of BitMEX, a popular crypto exchange who stated on April 11, 2019, that Bitcoin will end the year around $10,000.
Negative Effect of Bitcoin Price Increment
On the contrary, there are negative effects to this unexpected surge in Bitcoin’s price. Many have pointed out that it is a dead cat bounce where there is a temporary rise in price before another bear market rears its ugly head. Bloomberg, for instance, in its April 10, 2019 publication outlined that the trading volume of Bitcoin did not correlate with its price surge and as such, it could lead to a drastic fall in its price.
Another instance is that of Jonathan @jcho710, a cryptocurrency hedge fund trader who on April 12, 2019, outrightly stated that Bitcoin will dump to $2,000 and as low as $1,900. According to the trader, the sharp decline will be followed by hodlers screams. There will be less adamant followers in comparison to what it has garnered of recent, he added.
Now if the market turns out the way these some platforms/individuals have predicted, cryptocurrency enthusiasts may be in for another round of pain and maybe this time, a more painful one compared to the last. Why is that? you may wonder. But look at it this way.
This is a time where Fidelity Investments, Julius Baer, and Bakkt are looking to launch a product in the market in order to attract institutional investors. The recent events that have also occurred have shown that the market is not merely led by sentiments, and media reports. That being the case, If the bear market isn’t over this time around, then it’ll take something more peculiar to make it come to an end.
All in all, Bitcoin’s recent performance is remarkable and as usual, it has positively impacted on the price of altcoins. Assets like Litecoin, Binance coin, Ethereum, and even Bitcoin SV which has faced its own controversy thanks to Craig Wright’s lawsuit to members of the community, have also had a leap in price. Things are looking rosy today, but what will happen in the next few months? Like many others, we’ve got our fingers crossed.