The Bitcoin (BTC) rate went through the $14,000 limit on Saturday, converted at €12,000.
It is the highest point since January 2018, just after the magical bull run at the end of 2017. Are we going to set a new record in 2020? Or should we consider a correction to fill the future gaps at $11,200 and $9,700?
We list a few analyst comments on Twitter.
Bitcoin started this year with a share price of $7,200 and had a relatively good start of the year. But when COVID-19 hit the world, Bitcoin could not escape the malaise in the stock markets either. The price fell to $3,850 in a very short period of time.
In retrospect a bargain with the wisdom of today. Because since that Black Thursday, the price has continued to rise steadily. With the necessary bumps and obstacles on the road, such as the hefty rejection at $12,000 at the beginning of September.
But on the last day of October the price went through $14,000, albeit with a striking wick. Moreover, there is a very nice monthly closing, well above $13,700. This is the second highest monthly closing ever in the history of the cryptomint.
Dominance in the market has shot up above 63%, with the result that smaller crypto coins are bleeding hard. This is a trend that started on 20 October.
Fear & Greed Index
There is every reason for a positive market look for Bitcoin Revival and this is also reflected in the Fear & Greed Index, a composite index to measure sentiment in the market. With a score of 72 (“greed”) for 1 November this looks positive.
Relativation: usually sentiment is a result of a rising price and not the cause.
However, good sentiment can shake dormant investors, perhaps those who left the market in 2018, back on their feet. However, the question is whether the retail market should take the crypto currency to new heights. Or that business demand is growing exponentially.
Demand is increasing, supply is drying up
We see listed companies taking Bitcoin on their balance sheets and we see finance companies creating more and more entry opportunities for the big money. They are apprehensive about the spectre of inflation that hangs over the money market.
This will primarily be the investment and boutique funds within the financial world, rather than pension funds, banks or insurers. Pension funds in the Netherlands are also forbidden to invest in gold, for example. The DNB put a stop to this.
But the demand from governments may also increase. This week Iran announced that Bitcoin has been legalised as a means of payment. The sanctioned country is also going to buy Bitcoin from local producers.
According to the anonymous analyst Plan B, who works for a top 3 bank in the Netherlands, there are mainly states that are going to push up the price of the crypt currency. In his stock-to-flow model, he assumes a price of at least 100,000 dollars per Bitcoin.
Raoul Pal and the Winklevoss brothers, pokers and masterminds in the financial world, even assume prices between half a million and 1 million dollars a piece. They invariably come up with the same argument: the scarcity of Bitcoin: there are only 21 million in circulation and 18.5 million have already been mined.
Of these, 25% are reported to have already been lost or disappeared, giving a ‘net’ total of around 13.8 million in circulation today. And a large part of that is not going into trade: ‘hodlers’ are holding on to their property and are not selling for the time being.
As a result, the supply at the stock exchanges is drying up and the effect is that the price continues to rise. Bitcoin also has the characteristic: as soon as the price rises, interest increases. And then, just like in 2017, your hairdresser or neighbour may start talking about Bitcoin again. For some people, it’s just the signal to sell again.
And that can cause a sudden dip again. Bitcoin is a volatile creature, but the volatility is at a lower level compared to record year 2017. As more money is stored in the asset, exchange rate fluctuations will also be less sudden and severe.
The fact that central banks keep printing money is, besides scarcity, an additional ‘advantage’ for Bitcoin. Fresh money seeps through the banks to the financial markets and Bitcoin is increasingly among the options available. As Willem Middelkoop, himself a bitcoin owner, aptly put it: ‘Bitcoin and cryptocurrency are a key on the keyboard of the financial world’.
It is clear that Bitcoin has managed to shake off the necessary Fear, Uncertainty & Doubt (FUD) since the dip at the beginning of September.
If we look at the technical analysts on Twitter, the breaking of $14,000 and the bullish monthly closure is the subject of discussion.
In the short term, the price has to blow through the $14,000 and $14,100 resistance zone to pave the way for a new run.
The Dutchman Crypto Michaël also foresees a correction below $12,000 before a new rise sets in.
Traders with a short position therefore also take an increasingly higher risk in the market. A short squeeze, the liquidation of trading positions that speculate on a lower price, is in the making.
Always take sudden price fluctuations into account and only invest in Bitcoin with money you can spare. A warned man counts for two!