With prices hovering “steadily” around the psychological $8000 threshold, word on the web-based cryptocurrency street it that Bitcoin is back (?). No doubt that recent climb from the lows of sub $6000 prices to just above 8k is a fresh breath of air for those of us who have diligently braved the ravaging past six months, but is this really the turnaround the bulls are hoping for?
Under the internet’s thick coat of newfound price predictions and expert opinion based news, there seem to be some legitimate reasons pointing to why things could be looking up for Bitcoin and his cryptocurrency friends. For the market’s sake, the hope is that crypto buyers are approaching this uptrend differently than in the past, relying more heavily on research and value rather than impulse and hype. Surely, there’s a healthy (or unhealthy) mix of both.
For those of us that actually want to find the underlying financial causes of cryptocurrency market moves, it seems as of late that more calculated and educated information is becoming available. But to save you all the trouble of a deep Google dive, (anything more than one search is exhausting, right?) I’ll summarize the latest findings.
Altcoins on the out?
The past six months have certainly lead to a purging of hundreds of so called altcoins. Bitcoin’s market dominance is nearing 50%, the highest it’s been since April, and trade volumes for altcoins are at historic lows. Because of the current structure of most exchanges, many users are most likely selling their altcoins in exchange for Bitcoin, the most common intermediary between fiat currency and altcoins, and holding it until something changes.
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This widespread sentiment shows trust in Bitcoins over altcoins and is reflecting so in the price. Whereas in the past altcoins typically mirrored Bitcoin’s trend, this time Bitcoin is rising disproportionately, and at points inversely, relative to the majority of the market.
Overall, this is a healthy market sign, showing more caution by buyers and continuing to thin out the herd of illegitimate altcoins. In fact, altcoins with something significant to offer are getting some time in the spotlight. Look at Stellar’s (XLM) performance over the past month.
Regulation battle won?
While the regulatory war still wages on, just the fact that cryptocurrency has survived over the past six months shows market resiliency. Regulation happens to be one of my least favorite crypto related topics, so to keep it short, the fact is that government across the globe are continuing to see more value and legitimacy in cryptocurrency. The attitude has shifted from, “How do we get rid of these things?” to “How are we supposed to treat these things?” Of course, this could and probably will have some lasting negative ramifications, but it undoubtedly helps the long term market. I’ll leave the regulatory talk at that.
Although the “ICO’s are dead” attitude continues to prevail on the surface of the internet, the number say otherwise. Estimates say that 12-14 billion dollars have already flowed into ICO investments in 2018, which is more than double the amount raised in 2017. The average ICO is now also raising double the amount of capital relative to last year. More importantly, however, the increased inflow of cash without the increased hype most likely points to large institutional investors silently entering the ICO space and trying not to attract attention. If all these things are true, it would certainly be hard to maintain a negative outlook on cryptocurrency’s future.
Stock market woes.
Last but most, traditional equity markets are seeing increasing hesitancy and doubt from investors. Morningstar analyst Dan Kemp made headlines for saying, “Our expectation at the moment is that you won’t have any real return from U.S. equities over the next 10 years. The U.S. equity market looks both extremely expensive and very unattractive relative to other markets.” Many would be quick to say Bitcoin’s recent rise is majorly attributed to stock market doubts, and although it’s certainly not 100% causal, a traditional economic downturn could be the push cryptocurrency needs to gain widespread mainstream legitimacy. Of course, there are many other alternative markets, but nothing as of late has garnered the attention of the masses like cryptocurrency has.
Things are looking good for Bitcoin, but may be bad for other investment avenues. Stay tuned here at Wall Street Survivor, as we all watch for whatever happens next.