Bitcoin is 8% higher over the past 24 hours at $6,815, according to coinmarketcap. Here’s why.
1. The Bitcoin (BTC) technicals
In November last year bitcoin broke from a trading range of $6,800 to $6,250 that had been held since mid-September, and began its descent to the $3,200 bear market low. The break coincided with the Bitcoin Cash brouhaha and which was blamed by many for triggering the collapse. Bitcoin has recaptured and, for now, surpassed those levels.
The fact that the price has broken through to the top end of the $6,000s is impressive, given the substantial resistance out in place by last year’s rangebound trading.
There may be some pullbacks from here but assuming momentum continues, then the next points of contention could come into view at $7,300, $8,500 and $9,950.
Another key technical flag was the golden cross in April, which saw the 50-day moving average cross higher above the 200-day moving average. The last time that happened was in October 2015 when bitcoin was priced at $250.
Finally there’s the halving. The best time to buy bitcoin is around a year before the block reward halving takes place, as seen in the chart below from Byzantine General. The reward drops from 12.5 to 6.25, slowing BTC issuance.
2. Fidelity Investments
Fidelity Investments, one of the largest asset managers in the world, will turn on trading for institutional customers “within a few weeks” it was reported by Bloomberg, via its Fidelity Digital Assets service.
With $2.4 trillion in assets under management, Fidelity doesn’t just bring credibility to the crypto world, it brings the institutional investors too.
3. US stockbrokers
In a similar vein, the purported entry of two of the big four US brokerages into bitcoin trading is massive.
The news started to leak out when evidence of TD Ameritrade testing bitcoin trading emerged, followed by reports confirming the same for E*Trade, again by a well-sourced Bloomberg report.
4. Money on the sidelines
Then there’s all the money that’s been sitting on the sidelines looking in.
Leaving the institutions to one side, the fallout from the bear market may have introduced many to the risks associated with investing in such a nascent asset class, which is a sensitive way of saying a lot of people got their fingers burnt.
But for every one of those, there will be others who either sold near the top or on the way down and have been looking to get back in when they could see a bottom forming.
Turns out the bottom was reached in December last year at $3,200. The second-time-round investors are coming back.
5. Fear Of Missing Out
Which brings us neatly to The Fear of Missing Out (FOMO) a much-observed psychological driver of speculative investing.
We can get a flavour of how this works when even the chief executives of leading altcoins chip in with their pennies (or millions) worth.
Here’s some pearls of wisdom from Justin Sun, the Tron boss, in a tweet today: “Never too late to buy. The best timing to buy $BTC, ten years ago or now”
What’s surprising about that comment is the comparison with when bitcoin was priced in pennies to today, from a risk-return perspective. It is something of a stretch to assign equality to the two entry points.
And the fact that he doesn’t say “buy Tron” alongside BTC is striking. Bitcoin dominance has been rising, currently standing at 58.4.
Bitcoin had been sucking the air out of the altcoin market because it is the main trading pair, although that has changed today as alts join in the rally.
On Monday morning when the mainstream media picks up on the gigantic strides made by BTC, expect more FOMO.
6. Bitcoin isn’t dead yet
The reality is dawning on at least some of the sceptics, or those of a previously agnostic view, that bitcoin is for real; it’s not going anywhere.
Those who bought into the Tulip bulbs bubble stuff are now wondering if they were wrong.
Bitcoin’s return from the sudden death that was meant to have been its fate, makes the case for its future, either as store of value comparable to gold or as a means of exchange, a more powerful story for those previously undecided. Barry Silbert’s Grayscale made a clever play on this with a cheeky “Drop Gold” ad campaign on social media.
7. Facebook Coin
The development of a Facebook Coin has been greeted with at least three responses from the crypto community and others.
First there’s the irrelevance school of thought that sees it just as a “virtue token” for the FB economy that will be sealed off from “crypto proper”.
Then there was the idea that it could be a bitcoin killer, because Facebook has a habit of levelling all before it.
Lastly, and more accurately perhaps, there is the notion that it will lift all boats.
This latter position has a truer ring to it. If the reports to date turn out to correct – especially the bit about listing on select crypto exchanges (maybe not Binance, but Serena’s Coinbase investment is looking good) – then Facebook Coin could potentially open crypto to two billion plus people around the world, across all Facebook’s properties.
8. Nike Coin
Our eighth point could have been crowbared in with Facebook but is probably best treated separately – Nike getting into crypto.
For those that don’t know, Nike filed a trademark for “Cryptokicks” on 19 April.
Nike is a company known to have its finger on the cultural zeitgeist, and from the text of the filing it looks like it is going to create a crypto currency that will target collectibles.
The footwear and apparel company talks about “providing a digital currency or digital token for use by members of an online community via a global computer network; facilitation of financial transactions using unconventional currency systems and bartering” as well as “crypto-collectibles customization for hobby or entertainment purposes”.
Collecting shoes is a thing, and it does not take much of a leap of the imagination to see Nike selling its one-off special editions exclusively through the medium of a “cryptokicks” token. Cryptokicks could be huge in a different, cooler, way to Facebook Coin.
9. The bitcoin market is maturing and resilient
That is the conclusion to be drawn from the fallout from first the Bitfinex/Tether mess and the threat to both from the New York Attorney General and, secondly, the hacking attack against the Binance exchange.
In previous times both of those events could have bordered on being catastrophic for prices, but after a little dent, the bitcoin price shrugged off the noise and carried on doing its thing.
10. New York Blockhain Week
There was a time when the gathering of the great and the good at New York Blockhain Week would see a spike in the bitcoin price. Looks like those happy days may be upon us again.
I was reminded of such when a flurry of emails started dropping for party invites, notably the Ethereal 2084 Afterparty taking place from 11pm to 3 am tonight at Brooklyn’s trendy Gran Torino, with music from Demedusa.
New York still matters as the home of the world’s premier capital market and as the trendsetter of a nation, although I’m sure many other locales in the US would beg to differ on that last part.
Moore pertinently, Consensys and all the other events of the week, focus the minds of the financial masters of the universe on the opportunities at hand. Numbers are way down on last year but it may not be a coincidence that this bitcoin lift-off has come just now.
11. Network fundamentals
In April on-chain bitcoin network transactions neared the all-time high set in December 2017 of 11.2 million, according to Diar Newsletter. And SegWit seems to be working well to hold back fees, they still rose 250% month on month, says Diar.
12 Stockmarket blues
When the Bloomberg anchor begins the morning show with a hook about the US-China trade tussle and comments “but I just want to show you this” – and brings up the bitcoin chart and the price flashing green, it is telling you what many other equity market participants are thinking.
One of the selling points of bitcoin had been its supposed negative correlation to the equity markets.
Well, that relationship in evidence this past week, certainly seems to have tweaked the collective consciousness of mainstream investors as they notice – either in their newspaper or on a computer screen – that when the equity markets were pointing lower, bitcoin was doing the opposite.
That was another reason for those not already invested, if the other 11 above were not enough, for “getting off zero”.