The last time Bitcoin dominated the media Q4 2017, it jumped from under $10,000 to just below $20,000 in under a month.
Bitcoin’s recent rally has seen the cryptocurrency soar from the clutches of a bitter bear market at $5000 in early April to $12,935.58 overnight, its highest level since January 2018. Bitcoin jumped 15% in one of its largest one-day rallies in over a month, whilst booking its 8th straight session of gains. Can Bitcoin maintain the rally this time?
What’s causing this latest rally?
Facebook. Bitcoin’s popularity has soared ever since Facebook announced that it would be launching its own cryptocurrency, the Libra. This is a big deal for cryptocurrencies. We only have to think back to last year when Facebook pulled its support of ICO’s on their site and the price of Bitcoin crumbled.
What is the Libra?
Facebook’s digital currency has been created as a means of payment and for international money transfers. It still has a lot of hoops to jump through as far as regulation is concerned but it certainly has the industry on its toes.
So why does it matter?
By launching their own cryptocurrency, Facebook are giving legitimacy to crypto’s across the board. When a tech giant like Facebook jumps behind cryptocurrencies, mainstream acceptance is much more probable, boosting future demand expectations. This is being interpreted as a massive vote of confidence from a hugely important player. Not something the markets are going to ignore. As with all limited resources, higher demand can have a significant impact on the price, and quickly.
Can it last?
The rally in late 2017 was based largely on fear of missing out (FOMO) as the world started learning what Bitcoin was. Google trends data for Bitcoin showed that interest in Bitcoin was much greater then than it is currently. Another important difference is the number of transactions per second on bitcoin’s blockchain, 3.5 transactions per second*. This level was only briefly reached in 2017 before it fell. So certain facts and figures do support a longer-term rally.
Potential headwinds
Yet whilst fundamental factors are aligning in support of Bitcoin, there are still some potential headwinds in the not to distant future. A halving event, when the mining reward is cut by half overnight, is scheduled for May next year. Litecoin is due for a halving event in August which could have a negative impact on cryptocurrencies across the board.
And the chart?
Technically, the chart also raises some questions over the duration of the latest rally. Whilst Bitcoin remains firmly above its 100 & 200 sma, the RSI indicates overbought conditions. Bitcoin has rallied 133% so far this quarter. Bulls often take a breather after such a stellar rally, as a result a correction can’t be ruled out.
CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed
Recommended Content
Editors’ Picks
Dogwifhat price pumps 5% ahead of possible Coinbase effect
Dogwifhat (WIF) price recorded an uptick on Thursday, going as far as to outperform its peers in the meme coins space. Second only to Bonk Inu (BONK), WIF token’s show of strength was not just influenced by Bitcoin (BTC) price reclaiming above $63,000.
Runes likely to have massive support after BRC-20 and Ordinals frenzy
PUPS, WZRD, and PEPE are gaining liquidity through Bitcoin Ordinals. Creator of Bitcoin’s Ordinals protocol is debuting a new fungible token standard to rival BRC-20, Runes.
Ethereum shows firm support at key level as its correlation with US indices increase
Ethereum's price continued a sideways movement on Thursday as the market still awaits a trigger. Ethereum isn't alone in this horizontal trend; several major index funds have also traded sideways.
Mango Market attacker convicted of fraud and market manipulation
Mango Market attacker Avi Eisenberg was convicted by a federal jury on Thursday for "fraudulently obtaining" funds from the Solana-based decentralized exchange (DEX). He could face up to 20 years in prison for his role in the $110 million attack.
Bitcoin: BTC’s rangebound movement leaves traders confused
Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established.