Bitcoin Quietly Rising from the Ashes - Where to Next?
|For many traders, the recent parabolic surge in Tesla evokes a euphoria reminiscent of that surrounding cryptoassets back in late 2017, when Bitcoin peaked near $20,000. As we all know, Bitcoin ultimately collapsed to trade at just $3,200 a year later (though we wouldn’t expect that dramatic of a fall from Tesla, there’s a strong case for more downside if certain support levels are broken).
In any event, many traders who wrote off Bitcoin after its -85% drop may want to tune in again. The cryptocurrency has quietly risen from the ashes of despair to triple over the last 13 months. While the rally in price itself is certainly impressive, the most important word in that sentence may be “quietly.” Unlike the heady days in late 2017, when Bitcoin was a daily fixture in traders’ minds and financial media once it broke $10,000, relatively few market participants are even aware that Bitcoin has been rallying, much less obsessing over its day-to-day fluctuations.
Attention is notoriously hard to quantify, but using Google Trends search volume as a proxy, we can see that search interest in “bitcoin” was roughly 11 times higher at the peak in late December 2017. More to the point, search interest was already 7 times higher the first time Bitcoin broke above $10,000 in late November 2017:
Source: Google Trends, GAIN Capital
The relatively low level of retail interest in Bitcoin suggests that we’re nowhere near the mania levels that drove Bitcoin through $10,000 for the first time a little over two years ago. In other words, the formation of another similar bubble (a common occurrence in Bitcoin’s history to date) could lead to the cryptocurrency exceeding its previous record highs near $20,000.
While longer-term measures of sentiment remain subdued, the short-term price action suggests that Bitcoin’s rally may be due for a breather. Prices are approaching the highs from August, September, and October of last year in the $10,500-$11,000 range, with the RSI indicator showing signs of stalling out in overbought territory.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.