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Cryptocurrency skeptics who only focus on Bitcoin’s immediate price action are failing to see the forest for the trees.
In a recently published op-ed, Bloomberg contributor Leonid Bershidsky advised investors to ignore Bitcoin’s quick ascension to $5,000 as the move was nothing more than a “blip” driven by manipulation. Throughout the article, Bershidsky questioned the logic of investors optimistically viewing “Bitcoin as a better safe haven than other, more traditional investments” which provide more reliable returns and he advised investors to steer clear of cryptocurrency. Unfortunately, this guidance relies on more misconceptions than truth.
Bitcoin Forces Stocks to Play Second Fiddle
Admittedly, last year’s cryptocurrency price action was far from stellar, but viewing 2018 in isolation fails to incorporate Bitcoin’s performance since inception and this stunted view also ignores the technological strides blockchain and the Bitcoin network have accrued over time.
The premise that cryptocurrency investors are essentially putting their money into a slot machine is flawed and while most people will agree that Bitcoin is an extremely volatile asset, conventional portfolio building strategy calls for representation of high growth assets. Since the end of 2017s monster rally a number of financial analysts have suggested that a 1 to 2 percent digital asset allocation should be part of every well-diversified portfolio and considering Bitcoin’s current performance this appears to be sound advice.
As the chart below shows, the first half of 2019 provided great returns for stock investors and at the moment Bitcoin is strongly outperforming each of these markets.
Bitcoin vs. Major Markets
Bitcoin vs. Major Markets: Source: YCharts
Bitcoin’s rise from $3,200 to $5,000 meant it was time for investors to begin paying closer attention to the cryptocurrency market and investors who followed Bershidsky’s advice in April have now missed out on a 180% gain.
Bitcoin-USD Daily Chart
The Market has Grown Beyond Speculation
According to Bershidsky:
There has been no good news about cryptocurrencies lately — they aren’t acquiring greater acceptance as investments or payments, and the crypto experiments of central banks, governments, and major companies haven’t moved beyond dabbling.
Again, there are numerous inaccuracies within this statement. In reality, the cryptocurrency market is booming and in more ways than one. Venture capitalists, entrepreneurs, financial institutions and numerous governments took note of Bitcoin’s 2017 performance and in 2019 the cryptocurrency market is backed by more than just speculative retail investors.
Fidelity Investments, Goldman Sachs, TD Ameritrade, and the Intercontinental Exchange are just a few of the larger players that have expressed deep interest in Bitcoin investment. Contrary to Bershidsky’s statement, the entire cryptocurrency ecosystem has evolved and also begun to penetrate other sectors.
In fact, less than two weeks ago MetLife announced that it would use Ethereum blockchain to streamline the processing of life insurance claims and StateFarm and USAA are reported to be following suit. Mastercard, Visa, Bank of America, and a growing list of companies are regularly filing blockchain-related patents and hiring blockchain developers at an increasing rate. The mass adoption of blockchain by these massive insurance and banking corporations is no laughing matter as life insurance is currently a $2.7 trillion dollar industry.
Further proof of the sector’s diversification and expansion comes from the rapid growth in the industry surrounding peer-to-peer and institutional-level crypto lending. This multi-billion dollar industry has blossomed to the extent that there are now a number of companies which allow cryptocurrency holders to securely stake and lend their digital assets for an attractive return.
Therefore the one-sided view that cryptocurrency investing is nothing more than gambling is quickly approaching obsolescence. Today investors have a range of crypto-investment options to choose from and it is much easier to align one’s selection with their appetite for risk.
Don’t Believe the FUD
Obsession over the threat of manipulation, hacks, scams, drugs, dark markets, terrorism, and other illegal activities are another frequent set of critiques no-coiners and crypto skeptics often present when lambasting cryptocurrency. While manipulation, hacks, scams and, ransomware does pose a credible threat to portions of the sector, research has shown that less than one percent of Bitcoin is used for the aforementioned illicit activities.
The oft-referenced possibility of the Bitcoin network becoming centralized and susceptible to a 51% attack is also baseless. In reality, the Bitcoin network is stronger than ever and on June 21 the hash rate notched a new all-time high above 65,000,000 TH/s. This means it would take an immense amount of computing power to compromise the network and the fact that other fundamentals like block size and daily on-chain transaction volume are on the rise are all proof that a growing number of people are using Bitcoin.
Bitcoin Network Hash Rate
Bitcoin Network Hash Rate: Source: Blockchain.com
Critics unwavering concern with hacks and scams are partially sourced from the trauma some investors publicly endured as the initial coin offering (ICO) era of 2016-2017 imploded and many projects and investment schemes were exposed as nothing more than get rich quick schemes.
Looking to the present, these issues have been addressed and thanks to the ingenuity of large cryptocurrency exchanges, entrepreneurs, and blockchain startups can now safely raise funds through initial exchange offerings (IEOs). Major exchanges like Kraken and Binance have also addressed the threat of hacks by integrating stringent security features to protect users funds.
Kraken upped the ante by providing increased transparency into its reserves through a Proof-of-Reserves audit which is carried out by an independent auditor. Meanwhile, Binance protects investors with its Secure Asset Fund for Users (SAFU). Recently the fund was put to the test when Binance underwent a $40 million hack in May and not a single investor lost money.
Simply put, major players in the sector have worked hard to address the weaknesses that undermined the sector’s credibility and the current state of the market does not align with the dystopian vision that crypto-skeptics frequently project onto the sector.
Ultimately, Things are Looking Up for Bitcoin
A simple investing idiom that many traders throw about is ‘don’t trade against the trend’, especially if it’s pronouncedly bullish. Bitcoin’s recent performance should perk up the ears of any sensible investor and while attempting to counter trade such a strongly established trend is questionable, completely ignoring it is nothing short of foolish. As Bitcoin repeatedly cascaded to new lows in 2018, smart money quietly began to accumulate Bitcoin and institutional demand for the digital asset has steadily risen since November 2018.
Proof of this comes as recently as June 17 when open interest for Bitcoin contracts at CME Group eclipsed the volume seen during the peak of the 2017 crypto bull market to reach 5,311 contracts totaling 26,555 Bitcoin (roughly $246 million). At the moment the general consensus is that institutions and Bitcoin’s upcoming halving event are fuelling the current rally.
CME BTC Futures Open Interest
CME BTC Futures Open Interest: Source: CME Group Twitter
From a bird’s eye view, the cryptocurrency sector is clearly vibrant and expanding. Crypto-payments and peer to peer transactions are gaining traction across the globe and Bitcoin is fast becoming the preferred store of value and exchangeable currency in economic and politically volatile countries like Iran, Venezuela, Argentina, and Turkey.
At the same time, investors in democratic countries with stable economies now have more credible, regulated options for investing in cryptocurrency and as discussed in this article, investment is merely one component of what has now become a multifaceted sector.
Cryptocurrency is bigger than investing and it’s bigger than just Bitcoin. The narrative that cryptocurrency has no future other than speculation is utterly false and the failure to adopt a long view of the sector’s growth potential means investors and businesses are leaving money on the table.
How do you think Bitcoin will perform over the next two years? Share your thoughts in the comments below!
Images via Shutterstock, Twitter, CME Futures Group, YCharts, TradingView, Blockchain.com
The post Forget FUD, Day Trades; Go Long On Your Bitcoin Investment appeared first on Bitcoinist.com.
Forget FUD, Day Trades; Go Long On Your Bitcoin Investment
Cryptocurrency markets are cooling off during the morning’s Asian trading session. The July fourth parties in the US maybe coming to a close but Bitcoin is beating a retreat at the moment, dragging the altcoins into the quagmire once again.
Bitcoin Dumps 6 Percent
The rapid fire recovery back to $12,000 from its 30 percent purge to $9,600 had the Bitcoin bulls dancing again. There were clearly a lot of buyers below $10,000 and a lot of triggers were ignited when BTC hit that long predicted 30 percent correction.
BTC did not remain at $12,000 for long though and spend the best part of the past 24 hours consolidating at around $11,800. A few hours ago BTC dumped back to $11,000 in one swift candle. Since then it has regained composure settling at around $11,150, down 6 percent on the day.
The move has dropped BTC market capitalization back below $200 billion as the prospect of another lower low looms. It may just consolidate here for a while though; many are of the opinion that $10,000 could be the new floor for the time being.
Cryptocurrency Crush in Altcoin Avalanche
There is no doubting that Bitcoin dominance is causing the slow death of the altcoin markets which, yet again, are getting battered today. Over the past 24 hours $16 billion has left the space as total market capitalization has declined from over $335 billion to below $320 billion where they currently are.
Cryptocurrency trader ‘Moon Overlord’ eyes the potential for gains in a lot of the altcoins, many of which are still totally smashed from their all-time highs.
“The one thing I will say about $ALTS is the upside on them right now is incredible. A lot of the top 100 altcoins are down 95-99%…. they can’t even go much lower. The upside is 10, 20 50X+, what are you waiting for that extra 0.12% down to buy them?”
The one thing I will say about $ALTS is the upside on them right now is incredible
A lot of the top 100 altcoins are down 95-99%…. they can’t even go much lower
The upside is 10,20 50X+, what are you waiting for that extra 0.12% down to buy them?
— Moon Overlord (@MoonOverlord) July 4, 2019
Other traders are exercising caution stating that altcoins can drop a further 90 percent from their current weak positions.
“I’ve seen many $alts plunge 90% to the down-side after a 90% drop. Careful, ‘limited downside’ is an extremely dangerous meme for your portfolio, no such thing exists.”
It is true that many are still way down from their peaks and are not looking like recovering anytime soon. The second largest cryptocurrency in the world, Ethereum, is 80 percent down from its giddy height of $1,400 in January last year, and Ripple’s XRP token is down 90 percent according to Livecoinwatch. Others such as Bitcoin Cash, Cardano, Stellar, Dash, NEO and IOTA are in even more pain as the altcoin avalanche continues.
As we round out the week there is a lot of red on the crypto charts during Asian trading this morning, and it could well continue into the weekend.
Image from Shutterstock
The post Altcoin Avalanche Begins as Cryptocurrency Markets Shed $16 Billion appeared first on NewsBTC.
Altcoin Avalanche Begins as Cryptocurrency Markets Shed Billion
As the parties wind down in the US and the impending hangovers begin to fester, Bitcoin is taking a breather. In what appears to be the beginning of a consolidation phase, BTC has dropped around 8% on the day.
Bitcoin Price Falls Back To $11000
The epic 25% bounce back from the depths of $9,600 took Bitcoin price to $12000 briefly yesterday. For the duration of the fourth, it managed to consolidate around $11,800 but has fallen sharply a few hours ago. The latest dip has returned BTC back to $11k, and it is currently holding just above there at 00.
Daily volume has retreated back to $25 billion and BTC market capitalization has just dipped below $200 billion again. As Bitcoinist reported earlier this week, BTC may have found a new floor at around $10,000 but a drop below this could signal a deeper dip than the previous one, possibly somewhere back in the $8k region.
The CT traders seem to have taken the day off for the US holiday and things are pretty quiet in crypto land at the moment. Looking at next levels of support, the 50-day moving average is currently at $9,200 so this may serve as the next lower low if BTC heads south again.
On the four-hour chart, Bitcoin price has already dropped below the 50 MA and could head towards the 200 which is currently at $9,600. As in previous cycles, there was a lot of buying pressure at four figures but this may not be of the same magnitude if BTC drops below $10k again.
CNBC, which often serves as a counter trade signal, seems to be bullish on Bitcoin however with this rather festive tweet posted a few hours ago.
Cause Bitcoin you’re a … pic.twitter.com/wd71pu6Npi
— CNBC Futures Now (@CNBCFuturesNow) July 5, 2019
Altcoins Getting Battered Again
Total crypto market capitalization has dumped over $15 billion on the day but Bitcoin dominance remains over 65% according to Tradingview.com. Yet again the altcoins, which are already in bad shape, are getting battered.
Ethereum has dumped 5% to return to $285 and XRP has shed a similar amount falling back to $0.387. Litecoin is holding $120 at the moment but Bitcoin Cash and EOS are both down 4%. There is a lot of red on the altcoin markets during Asian trading this morning and only a handful of the very low cap ones are making any progress.
The weekend may see more consolidation from Bitcoin which appears to result in a dump in the altcoins. It might be time for the daddy of crypto to take a breather for a bit.
Will Bitcoin price make another lower low or remain here for a while? Add your thoughts below.
The post Bitcoin Price Begins Consolidation; Markets Cooling Down appeared first on Bitcoinist.com.
Bitcoin Price Begins Consolidation; Markets Cooling Down
With half of 2019 already gone, here is a look at how the customary Bitcoin price forecasts have fared.
First Half of 2019 for Bitcoin
On the calendar, 2019 comes after 2018 but in crypto history, the year will undoubtedly be of far greater significance. Reason? Well, 2018 was something of a long winter for virtual currencies with prices falling by more than 80% across the board.
Perhaps in 2018, people wouldn’t be so eager to offer price forecasts, but alas they were. Not at first though because the Q1 2019 saw not much excitement in the market.
When not releasing their pseudo-cryptocurrency, JPMorgan spent Q1 2019 calling BTC at $2,400 fair value and saying the top-ranked crypto was only useful in a dystopia. From a price action perspective, it was dull until April Fool’s day.
April 1, 2019, triggers a full-blown rally that sees bitcoin cross $4,000, topping out at $8,000 a month-and-a-half later. Since then, it has been upwards with a few 30% declines along the way, and now BTC is up 220% in the first half of 2019.
In Q1 2019, commentators seemed prepared to stick to talking points like fundamentals without giving price forecasts. Since April Fool’s day, however, the price bets have come out in force.
From $10,000 to $40,000
Perennial bitcoin price forecaster Tom Lee of Fundstrat Global Advisors has moved from a conservative $10,000 to a more bullish $40,000 forecast in the space of three months. To be fair to Lee, he always did say 2019 would be positive for bitcoin.
The Fundstrat chief’s $10,000 prediction came to pass in June 2019. With the $10K mark attained, Lee believes this price milestone will trigger a FOMO-driven hype among retail investors taking BTC to $40,000 before the end of the year.
Others like Max Keiser also predicted that bitcoin would hit $10,000 back when the rise above $6,400 was still the 2019 high. Before any of these price calls, however, Weiss Ratings did say BTC would reach a new ATH in 2019.
For Keiser, the main goal isn’t even a new ATH but a six-digit price valuation that takes bitcoin’s market capitalization into the trillion-dollar arena on similar levels with commodities like gold.
Some commentators also added to the list of future price calls. The stock to flow, price models, predicts a BTC price of $55,000 by 2020.
The 2020 halving constitutes an integral part of many of these new future price bets with the expectation of BTC continuing its parabolic advance in the lead up to the block reward halving.
As always, there are the naysayers, “bitcoin is going to zero” brigade whose forecasts end up being more laughable than Lee’s $25k end-of-year price call for 2017. JPMorgan says BTC is overpriced, Nouriel Roubini, like a broken record never fails to bring up the $0 prediction.
What is your end of year price forecast for Bitcoin? Let us know in the comments below.
Images via Tradingview
The post The State Of Bold Bitcoin Price Predictions For 2019 End appeared first on Bitcoinist.com.
The State Of Bold Bitcoin Price Predictions For 2019 End
| submitted by /u/eoboh
Anthony “Pomp” Pompliano, co-founder & partner of Morgan Creek Digital Assets is the latest to join the rank of bulls who believe Bitcoin price could hit the $100,000 level by 2021. The former Facebook executive borrowed his bullish bias from a so-called halving event next May that will slash the supply rate of Bitcoin by half. That would make the cryptocurrency scarcer than it already is. On the other hand, an increase in demand would prompt people to bid for Bitcoin at higher rates.
“Supply-Demand economics remain valid,” reasoned Pomp. “They are a great way to determine the market price. So, if the demand for a fixed-supply asset increases, we continue to see price appreciation.”
Bitcoin surpassing $10,000 got people talking…
Bitcoin hitting $100,000 would get the world talking.@APompliano has a $100K price prediction for 1 BTC by the end of year 2021
— Jessica Walker (@Jessicaw_tv) July 4, 2019
Halving and Bitcoin Price
Halving has historically done well to Bitcoin.
Every four years, the cryptocurrency’s underlying algorithm reduces the supply of Bitcoin by half. In the beginning, the cryptocurrency’s daily issuance rate was close to 7,200 BTC at a block reward of 50 BTC. Following the first halving in 2012, the regular issuance got reduced to approx 3,600 BTC with block reward going down to 25 BTC. And in the next, the numbers got slashed another half — 1,800 BTC daily issuance at a block reward of 12.5 BTC.
By May 2020, the block reward will get cut to 6.25 BTC per block while the daily issuance rate would be about 900 BTC.
Simultaneously, the price of Bitcoin noted four-digit percentage gains upon every halving event. Following the first supply rate cut, the cryptocurrency noted a 7,976 percent surge in its spot rate. And after the second, it rose by 2,902 percent, as further illustrated in the chart below.
The all-time highs achieved during each halving also followed more substantial downside corrections. After December 2, 2013, the day Bitcoin established a new historic high of $1,163, the price pursued a strong downtrend, eventually falling by approx 86.90 percent from the local top. Similarly, following the next all-time high formation on December 16, 2017, which was near $19,666, Bitcoin corrected to the downside by approx 83 percent.
There were also other catalysts at play during the so-called halving uptrends. In 2013, the Bitcoin price boom came ahead of the hack of Mt. Gox, the largest cryptocurrency exchanges of that time. Willy Report later claimed that shady people in Mt. Gox were artificially inflating the Bitcoin price using bots.
“Basically, a random number between 10 and 20 bitcoin would be bought every 5-10 minutes, non-stop, for at least a month on end until the end of January,” read the investigation.
The next halving uptrend of 2017 had also experienced shady market behavior. In that, a massive influx of new blockchain startups conducted billions of dollars worth of crowdfunding rounds – all raising funds in Bitcoin. That increased the demand of the cryptocurrency, which sent the price to an unrealistic $20,000 level.
Eventually, more than 90 percent of those startups failed and probably sold their bitcoins to cover their losses. The result was a strong downtrend that brought the cryptocurrency down to as low as $3,122 in December 2018.
Bitcoin has outperformed every major and minor asset this year in terms of returns. The world’s first and foremost cryptocurrency in June towered above the $13,500 level, bringing its year-to-date return close to a whopping 275 percent. That happened after major financial firms like TD Ameritrade, Bakkt, and Fidelity Investments announced that they would offer Bitcoin trading services. That said, Bitcoin had every reason to rise based on speculation of real demand, if not real demand itself.
But saying it would hit the $100,000 level is nothing but a crystal ball prediction. No evidence shows a broader demand for Bitcoin-related products as of now. And as BitMEX founder Arthus Hayes during the recently-held Asia Blockchain Summit, this cryptocurrency could go anywhere from zero to a million.
The question remains: why $100,000?
Do you think Bitcoin price will hit $100,000? Let us know your thoughts in the comments below.
Images courtesy of Shutterstock, Use Journal, Twitter :@Jessicaw_tv
The post The Core Flaw In $100,000 Bitcoin Price Prediction appeared first on Bitcoinist.com.
The Core Flaw In 0,000 Bitcoin Price Prediction