“Stable” bitcoin: what influences the exchange rate of the prime cryptocurrency
The Bitcoin exchange rate has recently demonstrated a rapid growth, after which, as a rule, a correction occurs. However, it is not known how large-scale it will be and what to expect from the crypto market in the future.
Since June, the rate of the prime
cryptocurrency has risen from $7,800 to $13,000. At the same time, the market capitalisation has increased by $100 billion. Everything indicates that investors believed in the unprecedented growth of the industry again and the sense of lost profits forced small investors to bring their money to crypto exchanges. When To The Moon
Well-known cryptanalyst Willie Woo spoke about new records. According to the expert, by 2025 the capitalisation of the cryptocurrency market will reach $ 1 trillion. After overcoming this mark, the next goal is $7 trillion (the gold market is estimated at that amount). However, in order for that to happen, Bitcoin must grow by 3400%. In the meantime, it all sounds like science fiction.
Mark Morko, CEO of Morgan Creek Capital, is confident, however, that by 2020–2021 Bitcoin will be in the range of $50,000–100,000. A professional investor builds his predictions based on Metcalf’s law, according to which the value of the network is proportional to a half of the square of the number of users of this network.
According to Yusko, the bull run, because of which the bitcoin rate will break new records, will be triggered by the network effect, emotions and the influx of a large number of speculators who will want to enter the market in the future.
However, all these bright forecasts concern the distant future. Now, some traders expect a bitcoin rebound. And that’s shouldn’t be surprising, because after every rapid growth, a correction occurs sooner or later.
What’s happening to the Bitcoin rate
According to analyst Peter Brandt, there are two scenarios. According to the first one, Bitcoin may expect a correction up to 80% of its cost. According to the second scenario, the prime cryptocurrency can enter a new parabolic cycle, which is characterised by a rapid increase in the value of the asset.
However, Bitcoin is still at around $12,000 and no one is getting prepared for a big sale.
“The indecision of Bitcoin in recent weeks is a natural process. After all, stabilisation has replaced the rapid growth: in April, the rate rose by 31%, in May - by 56%, in June - by 32%. When Bitcoin exceeded $10,000, it became psychologically difficult for investors to buy the asset. In order to return to purchasing again, participants need a pause, and, perhaps, a long one,” explains EXANTE managing partner Alexey Kiriyenko.
In addition, according to the expert, the situation on the market is accompanied by two more important issues: the strengthening of the
altcoins sale and the growth of the hash rate in the Bitcoin network.
“At the beginning of the year, investors were buying altcoins at low prices, expecting to see a duplication of the dynamics of the prime cryptocurrency. Since the growth of other cryptocurrencies has stopped copying the price dynamics of BTC, investors might switch to Bitcoin again,” he said.
At the same time, according to BTC.com, the complexity of
mining reached 9.06 trillion, setting a new historical maximum, claims Alexei Kiriyenko.
“This indicator is a physical guarantee of scalability with a possible peak increase in asset use. At the same time, the size of the transaction fee fell by a half - to $ 2, when compared to the beginning of July,” reminds the analyst.
When to expect a bitcoin ETF
However, in the short term, according to Alexei Kiriyenko, the factors associated with regulation will also affect Bitcoin. We are talking about the development of the situation with crypto custodians, Facebook's position on the requirements of the US and European authorities regarding the Libra crypto project. As well as news from the US Securities and
Exchange Commission regarding the Bitcoin ETF.
According to Jeff Dorman, Arca’s investment director, the situation with a bitcoin-fund, that is being traded on the stock exchange may be not so optimistic. As per Bloomberg report, the likelihood that the bitcoin-ETF exchange will receive approval from the US regulator has decreased significantly. And all because of the high volatility of the asset in June.
According to Jeff Dorman, the price of Bitcoin rose by almost 50% in June, but then dropped by about 20%. These movements, according to the expert, are caused by unregulated crypto exchanges, which allow users to trade with a leverage that is 100% larger than the size of the deposit.
Therefore, as long as the market remains manipulative and volatile, it does not create the necessary prerequisites for regulators to approve tools such as Bitcoin-ETF, which professional players are hoping for.
As for the current slack, there is a possibility that we will be watching a relative stability for some time. Although the growth or collapse can be provoked by any statement of financial regulators in the US and Europe.
The author: Annabella Lapshin