Bitcoin Price Calm Before the Storm?

Bitcoin Price Calm Before the Storm?

Bitcoin Storm

After a 2 month rally leading to all time high prices, Bitcoin has finally reached an equilibrium. The price has been bouncing between $1500 and $1600 since Friday, and as Monday came along it seems that the market is still unsure of its next move. Some of the pullbacks may be attributed to Ripple’s exceptional rise in the past couple days as its market cap reached $8.3 billion – almost as big as its closest competitor Ethereum. No one is sure why Ripple’s price has more than tripled in the past week rising from a price of $0.05 to more than $0.22. Kiritoflash 

Reddit claimed:

Well, over $4,000,000,000 (Four-Billion Dollars) was put into Ripple in the past week [] That is a lot of money to invest.

Furthermore, there are rumors on bitcoin talk speculating that the Ripple team is looking to lock down a huge amount of coins for as much as a decade:

“Rumors are dense about Ripple releasing an extensive lock-up agreement spanning a whole decade and more”

 

Supposedly, the team will reveal more info at the upcoming Consensus event hosted by Coindesk. The combination of this gossip along with an HODL mentality from the Ripple investors is more than likely the reason behind its astronomical rise.

How does Ripple’s rise affect Bitcoin?

While there is no direct correlation between Ripple and Bitcoin, the fact that the number three crypto more than doubled its market cap and became one-third that of Bitcoin may have made some Bitcoin investors uneasy. However, it is still impressive how resilient Bitcoin’s price has been even after the massive bull run. The current political turmoil surrounding Brexit, and the tensions between the US and North Korea has created a market for smart money looking to hedge on these events. As a result, it looks like crypto as a whole is experiencing a second wave of investments flowing into the ecosystem. We can see evidence of that if we take a look at cornmarket cap's chart of overall market capitalization:

  

We can clearly see in this chart

exponential growth in an overall market cap for all cryptocurrencies. To support that rise, we are also seeing the significant increase in trading volume to a level never seen before. Keep in mind that anybody who bought and held bitcoins in the past eight years is seeing the significant return on investment, so if you are looking to buy into crypto right now you may want to tread lightly.

What does the Future hold for Bitcoin’s price?

As discussed in our previous article, since current Bitcoin price is outside of any previous price levels it is hard to analyze the market. Users have been resorting to using Fib Retracements to predict future market action. Using the $1623 high and the $1426 low, the Fib Retracement predicts a next resistance level of $1700. According to the charts, there is also strong support at $1500 that has already been tested multiple times over the weekend. As the week progresses we will see if Bitcoin will be able to break past $1600 and test the higher resistance levels, otherwise, expect the price to stay in the $1500 until the next wave of volume comes along.

Since the amount of volume is similar from the time Bitcoin’s price rose from $1300 to $1600 to the past few days where the price has been bouncing between support and resistance, suggests that the bear and the bulls reach a stalemate and are violently trading back and forth trying to decide who will win. The price can keep on climbing astronomically or crash if the bears take the lead. The sideways trading over the past three days and the relatively high volume may be a sign that some major price action is incoming. Right now would be a good time to remind investors to never trade with more than you can afford to loose, as the consequences of a bad trade can catch up with you rather quickly.

Chuck Reynolds
Contributor

 

Alan Zibluk Markethive Founding Member

Bitcoin Market Cap Nears $30 Billion

Bitcoin Market Cap Nears $30 Billion

Bitcoin’s market cap has increased 5x in just one year, from around $6 billion during summer 2016 to now $30 billion, following its price rise from around $450 to now trade at around $1,760 on Coinbase.

  

The latest rise began on April 25th, exactly two weeks ago, increasing from $1,257 to $1,765. What caused this sudden $500 appreciation is not very clear, but its price increase appears to be inversely correlated with a price decrease of other digital currencies. Almost all of them are down today, while bitcoin is up, suggesting traders and investors who have seen some amazing gains and all-time highs in other digital currencies might be diversifying some of their profits to bitcoin.

The market cap of all digital currencies has seemingly not increased since yesterday, even though bitcoin’s market cap has. Suggesting its price increase might be merely reshuffling. On the other hand, when other digital currencies increase, the market cap also increases. That might mean new investors are entering the space through other digital currencies and then find out about bitcoin and diversify, a potential reversal of the usual entry point being bitcoin.

That might be because, with the exception of ethereum, it is very difficult to fiat buy other digital currencies. Outside investors, therefore, interested in say ripple, will have to buy bitcoin first. Thus if they want to sell ripple because they think it is too high, they would probably be buying bitcoin at the same time. So the boom in other digital currencies appears to be lifting up bitcoin too, a currency which, although increasing in value, has done so at a far slower rate than others, such as ethereum or litecoin. That’s because bitcoin has run out of capacity. It cannot welcome new users without a corresponding increase in fees which leads to other users being priced out and thus start using other digital currencies.

Solutions have been proposed years ago, but none have been adopted so far, continuing a loss of network effects as bitcoin’s market share was nearing less than 50% yesterday, slightly recovering today due to the reshuffling. Nonetheless, overall, everything is up. The combined market cap is now $52 billion. Many digital currencies have made some stupendous gains, up 10x, 20x, often in weeks, or in the case of ripple yesterday in just one day.

Interest in this space is clearly significantly growing, with ethereum leading as far as new projects and news are concerned due to its smart contracts capabilities, its many ICOs and its testing or experimentation by many household brands. Bitcoin too is growing, perhaps due to finding a space as a stop-gap and an entry way for other digital currencies, but it’s not clear for how long that will continue considering 40,000 transactions are currently stuck in a backlog, waiting to move.

Chuck Reynolds
Contributor

Alan Zibluk Markethive Founding Member