At the end of 2018, bitcoin had a value hovering around $3,100, a far cry from the $6,500 it had been valued a month prior and just above one seventh of its all-time high of $20,000, which it had reached in December 2017. It appeared as if the virtual currency would continue to struggle to find bottom as it hovered between $3,000 and $4,000 for most of the first quarter, but April showers bought new investor interest to the much-maligned cryptocurrency. At one point during 2018, bitcoin was valued at only about 28 percent of its all-time high.
“Risk appetite is positive for bitcoin,” declared established bitcoin bull Thomas Lee, head of Fundstrat Global Advisors. Lee optimistically predicted the cryptocurrency could exceed $10,000 sometime this year. At the start of this week, the currency was valued at just over $5,000. On April 2, 2019, it gained 14 percent in price over just 24 hours.
Is Cryptocurrency “Back?”
The effects of a bitcoin recovery could have positive ramifications for other virtual currencies, many of which have languished along with bitcoin. For example, Ethereum, the second-top cryptocurrency by market cap, posted 10 percent gains in 24 hours on April 3, 2019, the day after bitcoin began to show some serious life. Ripple, third cryptocurrency in the world when ranked by market cap, gained 5 percent on April 3.
Other altcoins, which are essentially any cryptocurrency alternative to bitcoin, posted gains in early April and continue to trade higher than earlier this year. Although most altcoin movement may be traced to the bitcoin leap in early April, the initial catalyst for the change is, most analysts admit, a mystery. Binance CEO Changpeng “CZ” Zhao said he is “clueless” as to why the gains are occurring. General consensus among “crypto insiders,” as CoinTelegraph calls them, is that “explanations are currently speculatory.”
The Truth About the Bitcoin Bounce
Not everyone believes there is no solid impetus behind bitcoin’s rise, however. Reuters reported a 20,000 BTC order (about $100 million worth) spread around multiple crypto-exchanges placed on April 2, 2019. Oliver von Landsberg-Sadie, chief executive of cryptocurrency firm BCB Group, reported “three…in-concert, synchronized, units of volume around 7,000 BTC in an hour” in support of this hypothesis.
Bloomberg author Eric Lam speculated the jump could be due to an April Fool’s Day story indicating the SEC had approved bitcoin ETFs. That story included information indicating the cryptocurrency market cap had “added $13.8 billion.” At some point in publication, a parenthetical “April Fools!” was added to the headline.
Chief market analyst at Think Markets U.K. Naeem Aslam responded to the jump by pointing out that markets with uncertain monetary policies tend to turn to “digital assets,” which could easily include bitcoin. “Monetary policy has become a joke,” he explained. “As we run out of options, people will turn to digital assets.” He cited Venezuela as an extreme example of this, and other analysts predicted Brexit could create wider demand for digital currencies.
Lee, on the other hand, said the explanation for the jump is far simpler. “If the S&P 500 made a 2.5 standard deviation move [as it has done year-to-date] and investors are looking for volatility, that is building a base case for bitcoin,” he said. However, the close of the futures trading market for bitcoin and ongoing derision from sage investors like Warren Buffett, who has consistently maintained bitcoin offers “no unique value,” could slow any appreciation before it hits Lee’s $10,000 benchmark.
As of Sunday, April 14, 2019, bitcoin values were trending “sideways,” remaining above $5,000 but failing to leap upward as so many investors had hoped and even became accustomed to early in the life of the cryptocurrency.
Tell us what you think:
- Is it time to buy bitcoin?
- Is it time to sell your bitcoin?
- Do you think bitcoin will keep bouncing back?
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