For virtual currency investors, the biggest question is whether this round of currency price increases is a bull market reset or a bear market trap.
Last night, Bitcoin experienced a skyrocketing price in just one hour. The price rose from the violence of about US$6,800 to a high of US$8,100. It increased almost 20% during the day. Under Bitcoin’s leadership, other virtual currencies also ushered in a strong rally, with single currency gains even exceeding 50%. Faced with the collective heating of the virtual currency market, many investors shouted that “the bull market is back”.
According to data from the CoinMarketCap website, the market value of Bitcoin increased by almost 20 billion US dollars in one day, and the entire virtual currency market also saw overall market growth. There was no “search” effect. Based on Bitcoin’s daily transaction volume exceeding 9 billion US dollars, yesterday there should be billions of incremental funds entering the market, rather than stock funds.
In fact, around the time of the Bitcoin boom, Bitfinex, a digital currency trading platform, also saw a number of big buys. With the increase in Bitcoin buying, many shorts were forced to close their positions, further amplifying the market’s uptrend. For this phenomenon, Nick Kirk, director of data at Cypher Capital, also expressed approval of it. At the same time, he also believes this sharp rally is more likely to be in response to the release of early regulatory pressures.
Pantera Capital Management, one of the world’s largest digital currency hedge funds, said that Bitcoin has bottomed out. The 6,500 US dollar is the low point for the Bitcoin bear market. Bitcoin will be above this price for most of this year and may even top last year’s record high of $20,000.
Fundstrat founder Tom Lee also expressed his confidence in Bitcoin. He believes that Bitcoin’s current P/B ratio and other indicators are about the same as the bear market in late 2014, and has formed a major technical correction. Based on this, he stated that the value of Bitcoin may increase more than three times this year and rose to 25,000 US dollars at the end of this year.
Historical data shows that Bitcoin has indeed risen in the second quarter of the calendar year. In the second quarter of 2011, Bitcoin went up to 1964%, 36.25% in 2012… 61.98% in 2016 and 131% in 2017.
Of course, Bitcoin OTC volume is also showing signs of market recovery. Since March, Bitcoin trading volumes in Canada, Europe, Vietnam, Mexico and Vietnam have increased and reached record levels.
With the successive admission of major financial institutions, such as the hedge fund giant Soros and the main financial group of the Rockefeller family, the financial size of the virtual money market will expand further.
However, it is worth noting that although Bitcoin is currently up sharply, it is still in a downtrend channel and has yet to break out effectively. It remains to be seen whether the virtual currency market has actually reversed. Investors should always be vigilant and pay attention to position management.
More importantly, the world’s major Bitcoin markets, including the United States, have sought to establish regulatory frameworks. Regulatory uncertainty will inevitably have a greater impact on the short-term development of the virtual currency market. In the long run, a healthy and orderly market can go even further.