Crypto’s Recent High: What It Means for the Industry and its Next Move
A couple of weeks ago, bitcoin surpassed $10K. The price has been hovering around that number since then.
I must admit, I still find it hard to believe, even though I’ve been involved in the crypto space for years.
As much as I’m excited about these milestones, however, there are a few important things to remember moving forward.
First, the space is still young…
… and while these achievements are great milestones, they don’t mean we should expect mass adoption anytime soon. Sure, there is excitement in the air, but until we see sustained growth and more important infrastructure (bitcoin “ATMs” and a banking system) developed for cryptocurrencies, we won’t see full adoption on a large scale.
The closest thing to adoption on a large scale is what’s happening in Japan right now. There is a lot of hype around an upcoming event there that will allow people to settle their taxes with bitcoin. But you can rest assured as soon as that event passes, we will be back to square one.
Crypto’s recent high has been the talk of the town. The past few weeks have been eventful, with Bitcoin reaching its highest price in over a year, and Ethereum not far behind. How long will it last? What is behind this spike? And what does it mean for the industry?
To answer these questions, we need to look at crypto through the lens of several different disciplines. This analysis draws on economics, finance theory, game theory and technical analysis to provide a framework for understanding the current state of crypto. The main takeaways are that 1) the recent price rise was largely due to a single whale buying up a huge amount of Bitcoin; 2) there are strong incentives for this whale to keep up their purchases; and 3) there is no fundamental reason why the price cannot continue to rise.
The Economics of Crypto
Crypto has had many bull markets that did not turn into bubbles. It is hard to say whether crypto prices are currently in bubble territory because there is no good model for crypto asset valuation, as explained in my previous post . However, even if we cannot say whether we are in a bubble, we can still draw some lessons from financial market history.
The cryptocurrency market has been on a roller coaster ride over the past few months. Prices have fluctuated, predictions have been made and broken, and sentiment has swung from one extreme to another. In this blog, we’ll take a look at what this upswing means for the industry and try to make sense of what might happen next.
The Wall Street Journal recently reported that the price of bitcoin was more volatile than any other asset in history. Such volatility has had an impact on all cryptocurrencies, but it’s important to remember that these are still very early days. The crypto market is only 10 years old, but already there are positive signs that it will become a mainstream technology in the years to come.
The recent high prices have led many analysts to predict a further rise in value. Some people say that Bitcoin is currently undervalued because it’s not yet widely used as a currency or store of value; others suggest that Ethereum (ETH) will overtake it due to its potential for smart contracts and decentralized applications (DApps).
Most cryptocurrency assets are still down 90% from their all-time highs.
No matter how you slice it, 2018 was a bloodbath for cryptocurrencies. The entire crypto market lost more than $700 billion from its January peak in market cap. This is an unprecedented drop, and most crypto assets are still 90% below their all-time highs.
The good news is that the crypto winter seems to be over. Bitcoin has risen 75% since the beginning of 2019, while most other assets have seen even greater gains. Ethereum is up 80%, Ripple is up 90%, and Stellar is up 350%.
There’s a big difference between the current crypto rally and the one we saw in late 2017. The previous rally was driven by retail investors chasing high returns and shrugging off regulatory concerns, whereas today’s rally is driven by institutional investors laying the groundwork for a more regulated crypto industry.
The big question now is whether this rally will continue or if we’ll see another correction soon. My bet is on continued growth as institutional investors enter the space and build stronger foundations for its long-term success.
With cryptocurrencies on the rise, and Bitcoin leading the charge, there has been a lot of buzz around the block chain and its disruptive potential.
The news that the price of Bitcoin recently crossed $2,200 is hardly surprising for those who have been following the digital currency for a while. Since late 2016, we’ve seen cryptocurrency lastly take off. It’s not just Bitcoin that has seen such incredible growth: Ethereum is currently trading at over $300 (up from under $10 in January), with Ripple and Litecoin growing at similar rates.
For those who don’t know much about cryptocurrency, this may come as a shock. But those in the industry have been anticipating this increased adoption rate, and they are expecting even greater growth to come.
So why is cryptocurrency taking off now?
One reason is that big companies are starting to jump on board. In May 2017, Japan passed a regulation allowing retailers to accept bitcoin as a legal payment method; that same month, Russia announced plans to legalize cryptocurrencies by 2018. These moves will surely make it easier for people who are interested in using cryptocurrencies when purchasing goods online or in stores.
The advent of blockchain technology and the subsequent rise of cryptocurrencies has been one of the most significant events in recent years. Cryptocurrencies have enjoyed a period of great success, with Bitcoin peaking at almost $20,000 per coin before falling back to its current levels.
However, the price of Bitcoin is just one aspect that has made the past year so interesting. The industry as a whole has seen some major developments – including an increase in ICO activity and a greater number of companies applying distributed ledger technology (DLT) to their operations.
It would be easy to assume that this trend will not continue in 2018; however, we think that this would be shortsighted. Blockchain technology and cryptocurrencies are here to stay for the long term, and there are numerous reasons why this is true. Not only does DLT have a wide range of potential applications across multiple sectors; but it also has the potential to revolutionize how we share information and data, as well as how we make transactions.
Bitcoin’s surge over the past few months has been nothing short of astonishing. In early February, we were trading around $6,000, and today we’re trading above $11,000. This is a run that has seen Bitcoin gain 83 percent in value in just over three months.
Of course, crypto-enthusiasts will be quick to point out that this is not the first time Bitcoin has done this. The cryptocurrency did see an extraordinary increase in value last year, rising from about $1,000 at the beginning of 2017 to almost $20,000 by December 2017. While it’s difficult to say what caused Bitcoin’s price run last year, there’s no denying that it was a feeding frenzy of media attention and hype.
This time around might be different though. While the price gains are still impressive and while speculation could certainly play a role in the rally — it wouldn’t surprise anyone if we saw some profit-taking over the next couple of weeks — there are other factors at play here, too. One of them is a growing belief that cryptocurrencies are here to stay and that they can serve as a viable alternative to fiat currencies like the U.S. dollar or the euro.