A year ago, no one thought it was possible. Two years earlier, that it is possible for bitcoin to soar to $20,000 from less than $1000 and later drop below $4000 was inconceivable as live Bitcoin prices are showing.
Prevailing Market Uncertainties
The trend shows that the price of Bitcoin which is presently trading below $4000 is yet to find bottom as analysts look compare recent price movement with earlier ones. The uncertainty in the market has made many players cautious about taking definitive stance in terms of investment.
The reason for this is that no one is sure if prices will start rising from this range or drop lower to $3000 or even below that. The suspense cannot be dissociated from the Bitcoin downturn of 2018 commenced in the first few weeks of January.
Wall Street Analysts Believed $5000 A Good Deal for BTC
Months ago, some Wall Street analysts opined that Bitcoin at $5000 would be a good time to invest.
That view butresses a seeming stability that the cryptocurrency found around the $6000 mark in which it traded horizontally for weeks. However, with the price of btc falling nearly 50 percent lower, reality has set in even for the most enthusiastic Bitcoin bulls.
Investor Apathy Despite Low Bitcoin Prices
This is seen even at $3,900, there has been no significant inflow of investments into the coin market contrary to expectations. What is obvious is that investors are wary of the direction that the price of Bitcoin will take in the short term.
Financial markets and investments traditionally are speculative. Many investors tend to want to strike a balance between risk and wish for profit.
Some opinions say that speculation involves daring to take the risks but the current coin market situation has proven that few are willing to do so without a measure of assurance of the direction the market.
Cautious Investment Climate for BTC
Everyone knows that the price of Bitcoin is comparatively low and some are saying that January is the time to buy and hodl. The reality however is different for a coin market that its most prominent feature is the ability to soar or lose hundreds of dollars in hours.
For instance, in 2017 it took just seven weeks for BTC price to rise to $20,000 from $6000. A market that volatile could enrich or make poor an investor overnight.
Digital Currency or Asset
Now talking about profit, one aspect of the digital currency that is usually overlooked is that Bitcoin was never meant a digital asset but a digital currency. The asset feature that attracts investors stems from the fact that the coin is deflationary.
This is so because the volume of bitcoins in circulation is limited. With higher adoption as a currency, there is the likelihood that its value will appreciate as a result of demand. However, this prospect is slim and has a source of concern as most users especially new entrants are in the coin market for business not because they seek new ways of making payments.
Bitcoin is Business for Many
The most attractive feature of Bitcoin for now is its digital asset use. Traders have made speculating on the coin a big time business as they continually buy during dips such as the market is experiencing now. In reality, it would not be improper to state that the activities that we’re seeing in the coin market at this time are mainly due to trades.
The inflow of funds that the coin market needs to see demand rise is mostly generally absent or coming in trickles as more organized institutional investors await critical regulatory policies to sway market direction.
The key regulatory move that will likely sway market outlook this January is the expected decision by the SEC on bitcoin ETFs. An approval will no doubt give the coin market something to cheer about because it reflects as a direct endorsement by the agency and a first step towards regulating a chaotic cryptocurrency market.
Although the expectations of the coin community are high towards bitcoin ETFs, it will likely be the decisive factor in short-term price movement of the market. Short term because there is a general consensus that prices are near bottom.
If the ETF fails approval, the market will contract further and Bitcoin prices below $3000 could be a possibility. The market wearied by bear pressure will lose more funds to outflows.
Low Prices Not Bad News for All
Nevertheless, this may just be the scenario that will set the stage for price surge as older Bitcoin investors with the financial clout will scramble to increase their holdings of the coin.
I am very certain that Bitcoin value at lower $2000 will set the stage for this because there are whales whose concept is to accumulate and hodl knowing the strategic position the coin will occupy as a financial instrument of the future.
Whether this will be good or bad for Bitcoin is anyone’s guess. What is obvious that concentrating the coin in fewer hands will effectively scuttle its potential as a tool for transfer of value which was the primary intention of Nakamoto Satoshi, the Bitcoin inventor.
A Boom for Whales and Lenders
It will further strengthen whales’ capacity to manipulate the market if rumors that there is a network of whales that know one another is true. Aside whales, coin lenders are having good business under present circumstances as hodlers showing unwillingness to sell at losses prefer borrowing fiat using their coins as collateral.
Still on the ETF, the SEC is yet to announce the sort of ETF it plans to approve for Bitcoin. Indeed, there are no guarantees that the agency will even approve any. The options available to the agency are synthetic and physical ETFs for Bitcoin.
The latter will have a marked influence on the market since it entails literally buying Bitcoins and the consequent inflow of funds into the coin market.
Mild Consequence of ETF Rejection
It is unlikely that failure to approve bitcoin ETFs will have so much of adverse consequences on the price debar any other significant and fundamental regulatory policy. The coin market judging from the last ETF rejection seems inured to that shock.
The worst case scenario would be that Bitcoin drops to low $3000 or even high $2000. This will happen quickly in a market in which most investors want to make a stand and from every postulation that would be the bottom for the year.
The above analysis infers that live Bitcoin prices could just be a few hundred dollars above the bottom price. The implication is that 2019 will also be a remarkable year for Bitcoin.
Predicting prices as high as $20,000 is unrealistic or perhaps risky. What is obvious for the coin is that investors will see more growth and profit this year than the last.
This on the other hand will not happen as quickly as we see the baseline. Nevertheless, sometime this year the fear of missing out will stimulate frenzy similar to what we saw in Q4 of 2017 that made many investors throw caution to the wind.