Bitcoin’s $2,450 Gain Could Be a Buying Opportunity: A blog around bitcoin and how you can invest in it.
Bitcoin rose to a record high of $2,451.23 on Monday.
With the recent surge in popularity, the cryptocurrency’s market cap has more than doubled, reaching nearly $40 billion.
The major drivers of Bitcoin’s growth are:
Governments and central banks depreciating their currencies through quantitative easing measures.
Increased number of investors as well as institutions investing in Bitcoin.
Bitcoin is fundamentally superior to other traditional currencies because it is decentralized. No single institution controls the Bitcoin network, which means that transactions are secure from interference from governments and central banks.
The currency is deflationary in nature because only 21 million Bitcoins will ever be created. This fact makes it superior to other traditional currencies where the supply of money can be increased at will by governments and central banks through quantitative easing measures that devalue the currency, thus making it easier for people to borrow resulting in inflation (falling purchasing power).
Bitcoin has had a great run in the last week, climbing from $1,910 to $2,450 before correcting back to the $2,300 level.
The jump was triggered by news that a group of companies led by The Bitcoin Scaling Agreement – which includes Bitmain, Blockchain and Coinbase – will hard fork the network on August 1st.
However, bitcoin is down around 10% since then, as investors seem to be taking profits as analysts predict further increases in coming months.
As investor sentiment begins to improve again, there are increasing signs that bitcoin’s recent gains could be a buying opportunity. The digital currency climbed above the $2,000 level earlier this month and its previous all-time high of $1,300 was broken in May.
But the price has remained volatile throughout June and July and the recent rally came after bitcoin fell below $1,900 on July 16th. It has already dipped below this level once again after making fresh highs for 2017 last week.
Bitcoin’s price has more than doubled since the beginning of the year, but it’s still trading well below its all-time high above $2,700. In fact, bitcoin’s current price of $2,450 is up more than $1,000 from where it was at the beginning of May.
The digital currency has been on a tear since May when it surged to a record high above $2,000. The surge continued in June as investors and traders speculated about the possibility of a bitcoin ETF approval by the Securities and Exchange Commission (SEC).
Bitcoin, the first and largest cryptocurrency by market capitalization, has rallied nearly 2,500 percent since the start of 2017.
However, it is down from an all-time high of $2,967.79 touched earlier this month.
The recent pullback in bitcoin prices could be a buying opportunity for investors who missed out on the rally, according to a financial technology entrepreneur and a bitcoin bull.
“I think it’s really important for the growth of the ecosystem that bitcoin still remains the center of gravity,” said Jeremy Allaire, CEO and co-founder of blockchain startup Circle. “I think there’s still a lot more room to run.”
Bitcoin has had a volatile week, shedding billions of dollars in its market value over a series of negative headlines. It was down 10% on Monday, then rebounded by 9.2% Tuesday before finishing the day with a 2.6% gain.
However, the cryptocurrency’s recent plunge to $1,900 levels could be a buying opportunity for intrigued investors, according to trader and hedge fund manager Brian Kelly.
In an interview with CNBC’s “Futures Now,” Kelly pointed out that bitcoin has seen four prior corrections of 20% or more this year alone. The virtual currency is down from its peak of $3,000 reached at the beginning of June.
Kelly argues that bitcoin’s recent sell-off can be attributed to three separate factors: regulatory uncertainty, hacking fears and the prospect of a bitcoin split (a hard fork).
It was the breakout that cryptocurrency investors had been waiting for.
Bitcoin topped $2,000 on Saturday and pushed higher on Sunday to trade as high as $2,479.05, according to CoinDesk’s bitcoin price index. The gain of more than $700 from Friday’s close of $1,743.20 was the largest percentage move higher since December 2013.
But the rally that began in early May has been driven by a slew of positive developments for Bitcoin and other cryptocurrencies, which are digital currencies used for payments and stored in ledgers known as “blockchains”.
While bitcoin is up about 151% this year so far, ether is up a staggering 4,350% to trade at almost $194 a coin. Litecoin has gained 375% this year so far and trades at around $32.
And while the recent gains may seem jaw-dropping, it’s worth putting them in perspective: bitcoin is still down more than 58% from its all-time high above $5,000 hit last year.
Bitcoin is currently experiencing a strong bounce that has resulted in an increase of nearly $1,000 since the lowest point on Tuesday. That low was the slowest period of trading in the coin’s history, with only a meager $195 million worth of transactions occurring over a 24-hour period. This is less than half of what Bitcoin normally trades, and there are a number of reasons why this occurred.
The first and most obvious reason is that the price decrease from its all-time high of $3,000 has scared off many smaller investors, who likely believed that this was the beginning of an even more serious decline. In other words, most investors have no idea how to trade Bitcoin and instead rely on their emotions as opposed to facts when making decisions about their investments.
The second reason for this slowdown is due to regulatory uncertainty. Recent reports that major exchanges were being investigated by U.S. regulators caused many investors to become wary about putting their money into Bitcoin, which subsequently led to a decreased demand for the digital currency, thereby lowering its price even further.
As we move forward into the future it will be interesting to see if there are any additional regulations imposed on Bitcoin and other digital currencies by U.S., Chinese or other governments around the world