Bitcoin (BTC) was trading at $7,600 this morning, off slightly from the weekend high registered at $7,779. Prices have lept almost 4% from Fridays low of $7,329 and over 7.5% from last Tuesday’s low in a positive turn for the world’s most popular digital currency by market cap and trading volume.
This follows on from a bearish month that has seen BTC fall 25% from a high of almost $10,000.
So what’s driving the price? Will the bearish trend continue or has the market turned?
Bear or Bull?
The bearish month of May saw descending daily trading volumes, and that trend has now continued into the first few days of June. Despite these low volumes, BTC pushed hard to break the $8,000 mark however we have seen that retrace this morning back to just over $7,500. Low trading volumes always worry the bulls as it commonly signals a bull trap, so a small pullback should be of no surprise to anyone. In fact, sustained low volume puts a question mark over how viable the gains have been.
It may be too early to say that we’ve turned the corner and entered a bull market, but this will be interesting to watch over the coming days, weeks and months.
Positive news from China has certainly helped drive positive sentiment in recent weeks. Despite Beijing banning initial coin offerings and effectively halting domestic bitcoin trading, China remains a hub of activity for blockchain development.
In a speech last week made Xi Jinping, the president of China, he acknowledged the potential of blockchain for the first time in public. The concept of blockchain is also part of the State Council’s technology strategy, spanning from 2016-2020.
It is not inconceivable for BTC to reach a new all-time high if China were to adopt blockchain and introduce regulations that relaxed the current ban on ICOs and domestic trading.
It’s not just China driving the positive momentum. Other innovative countries are leading the way with positive support for BTC and other digital currencies.
For example, Brisbane Airport, which handled over 23 million travelers in 2017, recently announced that they would become the world’s first aviation hub to offer cryptocurrency payment facilities in over 30 stores. The digital currency payment system is being rolled out through a partnership with TravelbyBit Australia.
The Marshall Islands will create and issue their sovereign cryptocurrency as legal tender meaning that banks and credit card companies in the country need to begin accepting it.
Money continues to flow into the cryptocurrency ecosystem with record levels of venture capital and fundraising activity via initial coin offerings. Beyond this, institutions are starting to take notice. A number of platforms have introduced Bitcoin futures trading – CBOE Markets and CME Group for example – and now we are hearing that the first European exchange, Deutsche Boerse, is now ‘deep at work’ on Bitcoin.
New institutional interest and money, the continued expansion of the ICO industry, and increased adoption of blockchain and cryptocurrencies by governments are all positive signs for the future.
With cryptocurrency prices largely driven by the volume of buyers, many investors believe that increased institutional investor activity in 2018 will result in improved liquidity which in turn will have a significant impact on cryptocurrency prices.
New regulations should lead to improved market stability which will encourage a new wave of retail investors – the so-called ‘nocoiners’.
Short-term predictions are challenging in this market, however, we are betting on 2018 bringing positive market action and higher prices across the board.