This content originally appeared on Level Up Coding - Medium and was authored by Dmytro Spilka
After a bearish start to summer, Bitcoin is back with a bang. The world’s oldest and best-known cryptocurrency had seen a period of severe volatility in the wake of China regulatory measures and environmental concerns stoked by Elon Musk, but has already climbed 50% since dipping below $30,000 and is showing little signs of slowing down.
The wider cryptocurrency market had moved into rally mode as Bitcoin held above $45,000 in the wake of the US Senate’s compromise on tax-reporting requirements for cryptocurrencies. As a result, there were even positive movements on Wall Street, with stock prices in Riot Blockchain and Coinbase moving higher after a testing couple of months.
(Image: CoinMarketCap)
As we can see from the total cryptocurrency market cap, the recent BTC surge has aided the recovery of many other altcoins that had seen a downturn in the wake of the market crash that started in May. For instance, Ethereum climbed 21% in the first week of August, outperforming BTC itself in this new wave of optimism.
(Image: CoinMarketCap)
CoinMarketCap data also shows that BTC has also been busy in recent weeks recapturing some of its market dominance that fell in May during the height of the market crash and subsequent sell-off.
Are we witnessing a resumption of the bull run that’s left investors excited since Bitcoin’s halving event of 2020? Or will this bounce be followed by further sell offs? Let’s take a deeper look at how this potential cryptocurrency market revival may play out:
The Path to $100k
According to Bloomberg strategist, Mike McGlone, it’s entirely possible that Bitcoin could hit a value of $100,000 before the end of 2021.
“This year is primed for Bitcoin to take the next step in its price-discovery stage and we see a refreshed bull market,” McGlone claimed in Bloomberg’s August crypto outlook. This prediction has been built on Bitcoin’s impressive resilience despite significant volumes of negative news regarding the cryptocurrency. China’s clampdown on crypto mining and trading activities forced a heavy dip heading into the summer, but BTC held its $30,000 price level fairly consistently.
“Bitcoin appears to have built a base around $30,000 that’s akin to $4,000 at the start of 2019, and we see performance parallels that could get the benchmark crypto back on track toward $100,000,” McGlone subsequently wrote on the matter — highlighting that Bitcoin’s $30,000 base price makes for a strong springboard for accumulation.
Notably, McGlone’s words come at a time where demand for Bitcoin has been at its highest level for some months. The Bitcoin Greed Index, a social media sentiment tracker has swung to a score of 71 out of 100 at the time of writing, indicating ‘greed’, just last month the same tracker was charting at 20 out of 100 — indicating ‘extreme fear’ from prospective buyers.
Here, it’s worth noting that Bitcoin’s base of $30,000 is likely to have been supported by both institutions and a far more voluminous retail market that simply didn’t exist in 2019. Speaking on the rise of retail investors, Maxim Manturov, head of investment research at Freedom Finance Europe, highlights that retail investing might soon even become more popular than crypto trading “as the crypto market lacks stability and can start being regulated any time, which actually already happened in China. In June, the Chinese government banned banks and payment systems from using Bitcoin, which led to a temporary collapse of the flagship crypto’s price. Investing into IPOs is a more secure option, too, since cryptocurrencies are not regulated. For instance, investors may buy ICO tokens that could never start trading on an exchange, which means one would never be able to sell them back. Conversely, when a company is launching an IPO, it must have its stock listed in an exchange, which allows an investor to act with confidence“
Along with this heavy level of investor enthusiasm, we also have significant holders in the form of institutions like MicroStrategy, which has accumulated over $4 billion in BTC by today’s estimated value. Tesla is another key investor in Bitcoin, holding around $1.5 billion in the digital currency, whilst the company’s CEO, Elon Musk has also admitted to owning BTC, ETH and Dogecoin. The world’s richest man, Musk criticised Bitcoin for its poor environmental record in May, leading to speculation that he’d sold his stakes in the cryptocurrency before Musk went on record saying “I pump but I don’t dump.”
Institutional Influence
Although retail investors have certainly played an instrumental role in keeping Bitcoin above its all-important $30,000 line of resistance, the most recent upturn in performance appears to be down to institutional investors.
“There was buying pressure from Coinbase, and I think the demand was from institutional investors,” claimed Ki Young Ju, CEO of the Korean blockchain analytics firm CryptoQuant. He also stated that, based on the “Kimchi Premium” and other on-chain indicators, there was little influence from retail investors behind the current run that Bitcoin’s on.
This lack of retail enthusiasm is likely down to growing tensions between cryptocurrency and US legislation on the taxation of crypto holders. Speaking in early August, Kyle Davies, co-founder of Three Arrows Capital, told CoinDesk that “The bill result so far is not great, but it is going to be followed by months of united crypto lobbying. The U.S. has seen prominent senior government officials fight on their behalf for crypto. I expect we’ll look back on this process as a great unifier that galvanized the industry.”
While the road to $100k will be filled with more fear, uncertainty and doubt for both retail investors and institutions alike, Bitcoin’s August recovery from a deep pullback is a key indicator that the cryptocurrency market has the strength to grow in the wake of setbacks, showing that further price accumulation and new all-time highs could well be reached throughout the rest of 2021.
Driving the Resurgence: Bitcoin’s Rally Revives the Cryptocurrency Market was originally published in Level Up Coding on Medium, where people are continuing the conversation by highlighting and responding to this story.
This content originally appeared on Level Up Coding - Medium and was authored by Dmytro Spilka
Dmytro Spilka | Sciencx (2021-08-18T00:03:12+00:00) Driving the Resurgence: Bitcoin’s Rally Revives the Cryptocurrency Market. Retrieved from https://www.scien.cx/2021/08/18/driving-the-resurgence-bitcoins-rally-revives-the-cryptocurrency-market/
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