In the latter part of 2017 and early January, Bitcoin was doing quite well. Then regulators came knocking and Bitcoin and other digital currencies like Ripple caved in under the pressure of people selling off. The price plunged from a high of $20,000 on December 17th to a low of $6,000 on February 6th. The same thing happened to a majority of altcoins whose number now exceeds 7,000.
The crackdown of Securities Exchange Commission (SEC) on ICOs in late December and early January also scared away crypto investors. This coincided with the South Korean government additional announcement that new crypto regulations would be introduced. South Korea accounts for a big share of the total crypto market. Any announcement made here should therefore be taken seriously.
The rebound of Bitcoin
The plunging of Bitcoin in the better part of January sent panic alarms all over. A currency that was worth more than $326 billion in mid-December was worth $118 billion in the first week of February. Since February 6th, Bitcoin and Ethereum, the two competing cryptos at the top have made tremendous gains. This has been received positively by cryptocurrency enthusiasts across the world and hence the rising prices of most of the cryptos. It is worth noting though that trading charts on 13th February were showing a bearish trend for Bitcoin. The 100 daily moving averages showed that the price was down and sellers were the ones holding the stakes. This means that the price could very easily go down some more. At the time, the coin was going for $8,720 which is almost 50% up from the year-low of $6,000.
What factors are favoring Bitcoin
For the better part of last week, the cryptocurrency market was in the red. The Chinese government intensifying its crackdown on digital currencies definitely contributed to the poor performance of the digital currencies. The testimony of the SEC and CFTC heads at Congress also played a role in making the markets dull too.
The cryptocurrency got a reprieve of some sorts last week when the top US regulators who were testifying before the Senate Committee called for a greater oversight over cryptocurrency. No new harsh measures were proposed by the Senate. The news gave crypto some momentum which could not be dampened even by a ban from the Thailand Central Bank on cryptocurrency.
Will cryptocurrency grow to where it was in December?
Probably yes and no. The answer depends on who you ask. A majority of crypto investors and enthusiasts want it to go up and they are rooting for that to happen. On the other hand, there are market experts like Mike McGlone, a Bloomberg intelligence commodity strategist, who says that the price of Bitcoin could drop to as low as $900. This is if dot-com bubble and go-go years are anything to go by.
While using Amazon.com Inc and the Nasdaq Composite Index’s great rise and then retreat of the price of Amazon in early 2000, he explained that Bitcoin is likely to go back to the $900 price tag which it had 13 months ago. He further explains that currently, Bitcoin has more than 50 million outstanding coins based on the original blockchain yet the developers initially intended to limit the supply of the coin to just 21 million. This means there is an oversupply which will eventually force the price to go down.