Bull Market Early or Bear Market Trap?
The more important question for investors in virtual currencies is whether this latest round of currency price increases is a bear market trap or a restart of the bull market.
The price of Bitcoin soared in just one hour yesterday evening. The cost increased from approximately 6,800 dollars to a maximum of 8,100 dollars. It increased by almost 20% throughout the day. Other virtual currencies also experienced a significant rebound under the direction of Bitcoin, with gains for single currencies exceeding 50%. Many investors yelled, “The bull market is back,” in response to the market’s collective warming.
The market value of Bitcoin increased by nearly 20 billion US dollars in a day, according to data from the CoinMarketCap website, and the virtual currency market as a whole also experienced general market growth. There was no effect of “seeking.” Since Bitcoin’s daily transaction volume exceeds 9 billion US dollars, incremental funds should have entered the market yesterday rather than stock funds.
In point of fact, the digital currency trading platform Bitfinex also recorded a number of significant purchases during the Bitcoin boom. Shorts were forced to close their positions as the number of people buying Bitcoins increased, extending the market’s upward trend. Nick Kirk, Cypher Capital’s data director, also expressed his support for this phenomenon. He also thinks that the release of early regulatory pressures is more likely to be the cause of this sharp rebound.
Pantera Capital Administration, one of the world’s biggest advanced cash multifaceted investments, said Bitcoin has reached as far down as possible. The bear market low for Bitcoin is 6,500 U.S. dollars. For the majority of this year, Bitcoin will be above this price, and it may even surpass the record high of 20,000 US dollars set last year.
Tom Lee, the founder of Fundstrat, also expressed faith in Bitcoin. He believes that a significant technical correction has formed because the current Bitcoin P/B ratio and other indicators are nearly identical to the bear market that ended at the end of 2014. He stated that the value of Bitcoin could rise to 25,000 U.S. dollars at the end of the year on the basis of this, and that it could rise more than three times this year.
Bitcoin has indeed increased during the second quarter of the calendar year, as evidenced by historical data. Bitcoin gained as much as 644% in the second quarter of 2011, 36.25 percent in 2012, 61.98% in 2016, and 131 percent in 2017.
Naturally, Bitcoin OTC volume also indicates signs of a recovering market. Bitcoin trading volumes have increased to new all-time highs in Canada, Europe, Vietnam, Mexico, and Vietnam since March.
The virtual money market’s financial size will grow even more as more major financial institutions like the Rockefeller family and hedge fund tycoon George Soros join.
However, it is important to note that Bitcoin is still in a downtrend channel and has not yet been effectively broken, despite its current strong rise. The virtual currency market’s actual reversal remains to be seen. Position management should always be taken into consideration by investors.
More importantly, the major Bitcoin markets around the world, including the United States, have tried to set up rules. The short-term growth of the virtual currency market will undoubtedly be impacted more by regulatory uncertainty. A well-organized market can go even further in the long run.