Explaining: the stellar run seen in Bitcoin


Bitcoin price is on track to having its second-best quarter since 2014 with a 92 percent gain within two months if it remains above $8,000 by the end of June. Since April 1st, about a month and a half ago, the bitcoin price has increased from $4,100 to $8,000, by nearly two-fold against the U.S. dollar.

The price trend of bitcoin so far into 2019 closely resembles that of its movement in 2017, a year in which it demonstrated arguably its strongest bull market as it surpassed $20,000 in key markets such as South Korea.
Bitcoin began 2017 with a large 40 percent quarterly gain, followed up with an explosive 80 percent gain in the second quarter, and ended the fourth with a staggering 219 percent gain.

The dominant cryptocurrency was able to sustain its momentum throughout 2017 to achieve a new all-time high due to a sudden spike in retail interest supplemented with significant mainstream media coverage.

Here we go again

There’s a lot of explanations: the simplest one is that we’re just actually part of a larger cycle. Bitcoin has gone through several cycles before these massive bull runs. We’re talking about sometimes 1000% or 50000% gains within a short period of time. Then it has these massive retracements that can go up to 80% or even 90%. That is just what we had coming off of $20,000 per coin all the way down to just above $3,000 per coin. That was about 85% retracement and the speculation in the market at the moment is that we are just getting started on that next parabolic cycle.

A Surprise from JPMorgan

Bitcoin has intrinsic value, admitted a team of strategists at major investment bank JPMorgan Chase & Co and warned that the coin mirrors a boom-bust pattern of 2017.

According to the strategists, bitcoin price now surges beyond its “intrinsic value” trading about twice as high as where the valuation would place it, Bloomberg reported. The team have treated Bitcoin as a commodity and have calculated its “cost of production” taking into account the information such as the estimated computational power, hardware energy efficiency, and electricity expense, the report said.

The question of media coverage

We also have to consider a massive element. Previously when we’ve seen Bitcoin go higher that has been in conjunction with a lot more news coverage being written about Bitcoin and that hasn’t happened this time. So does that suggest that maybe the news media is not quite jumping on this rally?

The question is which is causing which? Is the price causing the coverage or is the coverage causing the price? We would speculate that it’s the price causing the coverage and here is why.

At the moment Bitcoin is the best performing asset class, crypto is the best performing asset class in the world so far this year. Bitcoin itself has risen, even with yesterday’s drop is already up 100% since January 1st. So if the media is covering, it is positive. There is a very large community, a very quickly growing community adopting crypto industries.

I would say that the news headlines that we’ve been seeing are headlines that indicate that mass adoption is just around the corner. For example, Microsoft just announced that they are actually want to use the Bitcoin blockchain in order to increase online security. We have seen that HTC is about to produce a telephone that you can carry a copy of the Bitcoin blockchain a full node right in your pocket. We have seen an announcement from Flex which is a payment provider which goes to whole foods and thousands of other retailers across the United States, is going to allow people to pay at the cashier with cryptocurrency without the cashier even knowing it. It is gonna be a seamless integration.

As a conclusion, there is a lot of really good news right now and as well volumes in the crypto industry are at their highest levels ever by far. We saw that the CME Group futures contracts going above a billion dollars in a single day across the top crypto exchanges. They are all reporting the highest ever volumes at the moment.

If you want to read more articles about Bitcoin, why not take a look at this article about Legalizing Bitcoin for State Payments?