Crypto fans – rejoice. It seems that things are getting back on track with Bitcoin. The digital currency is back on the news today, following a massive uptrend over the past couple of days.
The cryptocurrency gained over 15% since Monday, reaching its highest price points after costing over 6000 dollars in November 2018.
Bitcoin started its tiny bull rush on Tuesday, after sitting more or less idly over the last few months. The lull in the market was a weird time for Bitcoin, which became massively popular around the world due to its incredible price jumps.
Before the drop in November came a much larger price drop at the beginning of 2018. After finishing 2017 with astronomically high prices, cryptocurrencies were exposed to the harsh reality of what happens when market prices become too inflated.
Due to the massive hype, a lot of inexperienced investors rushed to invest in cryptocurrencies back then without having sufficient knowledge and understanding of trading Bitcoin and similar assets. Unsurprisingly, as many experts predicted, this did not end well and the market crashed, causing a lot of people to lose their money or in worse cases – their entire life’s savings. The situation was abysmal indeed. The market went from being one of the most hyped up things about 2017 to a laughingstock from reactionaries who were resentful of its success just a few months prior.
Is bitcoin starting to recover after the events of 2018?
The price of the digital currency plummeted drastically in 2018. The price of each coin dropped by as much as 75% at some point, after reaching mind-boggling 20,000 dollars per coin in the year before. The market barely survived. A lot of illusions about the cryptocurrencies evaporated and went out of the window.
Now Bitcoin is still worth less than it ever was in 2018, but this is still a hopeful moment for the blockchain-based financial asset. The price of one Bitcoin is currently hovering above 5000 USD according to CoinMarketCap – a two-digit jump in a very short period of time.
This fact has crypto enthusiasts and investors around the world sitting with fingers crossed, hoping that the currency will soon be back under the spotlight soon enough.
Bitcoin gained over 14 billion USD on its market capitalization over these two days, according to the US-based cryptocurrency monitoring website. As is usually the case, with Bitcoin rising, other currencies followed shortly after. Bitcoin has that effect of dragging down or revitalizing the cryptocurrency market based on its performance. This has been demonstrated a number of times over the last few years.
This effect probably stems from the fact that Bitcoin’s success is perceived as the success of the industry. This encourages investors to invest in other tokens as well, which increases the entire market’s capitalization. This is especially relevant for the smaller investors on the market. Those who can’t afford or are unwilling to buy an entire Bitcoin, nevermind several of them. Other cryptocurrencies with smaller market caps, larger numbers of issued tokens and therefore – lower price are more than happy to accept that residual FIAT money which is financing their development. This phenomenon explains why XRP, Ethereum, and other tokens made significant progress as well. Litecoin is also up almost 25% by now and currently stands at around 86 dollars per coin.
What are the reasons for the sudden increase in price?
The media outlets have been extremely quick to report on the development, bringing it to the attention of millions of people around the world, which will likely further increase the growth of Bitcoin in the nearest future. There has also been a lot of speculation about the reasons for this sudden increase in the price of this flagship cryptocurrency. Most of the industry experts are of the opinion that the changes can be traced to the sudden shattering of the resistance point of the currency. The resistance point has been set at 4200 dollars and was being closely monitored 24 hours a day over the last few months.
A lot of investors already had buy orders waiting at the resistance point, biding their time before the resistance was breached so they could capitalize on the subsequent bull run. Therefore, it comes as no surprise that once the price point was breached, investor money started pouring in like crazy, prompting other investors to start investing as well due to the fear of missing out.
“Bitcoin’s break above $4,200 this morning was critical, as the market had been watching that level for a while,” says Mati Greenspan, senior market analyst for eToro. “No doubt some entry orders and stop losses were grouped right above.”
“Bitcoin has been trading range bound for a while now and shaking off some of the negative sentiment that it accrued in 2018,” Charles Hayter, CEO of CryptoCompare says.