Bitcoin’s Back and Touching $10,000
The world’s first and leading crypto by market cap has once again broken the $10,000 level...though it didn’t stay there long, stabilizing at $9,438 at press time. And the big question on everyone’s mind is, “Why?”. There are a few very plausible reasons, including a resurgence of good press – dampened by Libra and Telegram’s TON Coin – which undoubtedly played a role in Bitcoin’s resurgence.
What sort of good press? China, which has had an off-again, on-again relationship, said that it would be focusing efforts on developing blockchain technology, a heady signal for Chinese investors and traders who have often dealt with mixed signals from the PRC.
But that can’t be the whole story, right? Like most things in life, a key phrase to remember is ‘It’s complicated.’ While good press absolutely plays a role – there’s a trend of Bitcoin’s price spikes coinciding with Google searches – another is the uptick in trading volume on the physically-settled Bitcoin futures market on Bakkt, which has picked up following a disappointing launch.
So what now? As any veteran trader (or physicist) would tell you, what goes up must, inevitably, go down. And Bitcoin has yet to invalidate the bear trend it’s been in for the past 4 months. Markets will usually take time to consolidate after sharp upticks, and uptrends are still forming.
Wut We Think: A 40% rise over two days is nothing to sneeze at, but it’s too early to say whether that represents a return to the heady days of the summer bull market. If Bitcoin can stop falling under $9,000, and Bakkt contracts keep trading at rising prices, then the bulls may have taken back control of Bitcoin.
China’s Crypto Plans Move Forward
China has always been a big name in crypto...but now it’s accelerating those plans. Along with rumors of a new digital national currency, the Chinese Prime Minister has declared that blockchain technology is a key priority for his government. And his statements have coincided with a meteoric 40% rise in Bitcoin’s price over the weekend.
What is China doing, exactly? A big move has been the new law on cryptography, that China hopes will spur growth and investment in cryptocurrency and blockchain-related business. But it also ensures that cryptography remains a national security matter by making cryptography remain under government purview.
What’s this about a new currency? China, like many other governments, has issued warnings about Facebook’s plans to launch a digital currency. And the Chinese National Bank is looking to beat Libra to the punch by releasing a digital currency.
Chinese investors have taken the bait: In a sign that China’s promotions of cryptocurrency and related technology are working, Chinese mining company Canaan filed its IPO paperwork to go public on NASDAQ with a $400 million valuation.
Wut We Think: China is a big driver of cryptocurrency, and moves in China often have a direct effect on the prices of many cryptos, not just Bitcoin. But China is not exactly a bastion of decentralization, and its new law ensures that all node operators and miners have to register with the government. It remains to be seen if China will provide for crypto’s development, or just remove the ‘decentralized’ portion of the crypto dream.
Trading Spotlight: Fundamental Analysis
There are two main ways of analyzing an asset’s price trends – technical analysis, which looks at price movements and graphs, and fundamental analysis, which looks at the factors underlying a given asset’s success or failure — in other words, judging supply and demand. To have a truly useful and predictive analysis, a trader should be able to use both methods and draw their own conclusions.
Fundamental Analysis: For cryptocurrencies, fundamental analysis boils down to looking at three key factors: unique addresses on the blockchain, the number of daily confirmed transactions, and the hash rate of the currency in question. These factors help establish how widely used the currency is, and the frequency of use. For more information, check out the Monfex Trading Academy.