Volatility is one character you can’t take away from bitcoin and other cryptocurrencies. Just when you thought you had seen it all, another surprise greets you. Bitcoin analysts have continued to do and undo themselves as regard its prediction. In early 2017, bitcoin started trading around $1,000 and ended the year trading at $20,000. That kind of rise is too crazy to be predicted. Roughly a year after, it ended up losing about 80% of its value. Many analysts claimed they saw it coming and even went as far as to comparing the scenario with Tulipmania.
It’s almost two years since bitcoin pass the $10k milestone for the first time and now out of the blue, bitcoin price has surged above the $10,000 within few hours in the last couple of days. Yes! The volatility is back again, and as expected, analysts are coming up with different kinds of theories again. Bitcoin run of good luck started back in February after many have written off the cryptocurrency as a passing fad. The recent rise in bitcoin value has also seen other prominent cryptos like Ethereum, ripple, and Litecoin grow in value by about 20%–35%.
The $10k milestone achieved by bitcoin recently is likely to trigger the fear of missing out in the minds of potential investors, and if that happens, we are likely to witness a similar episode of 2017. Is that achievable? The answer is an emphatic yes. It may even go beyond the $20k mark achieved in 2017. The rise of bitcoin value in 2017 was triggered majorly by retail investors. This time around, it’s something bigger, although retail investors still have a crucial role to play. With retail investors still on the sidelines and bitcoin price already above $10k, the possibilities are endless for bitcoin this year.
What’s different this time around?
The question many are asking: what’s the catch this time around for bitcoin? Institutional backup! Institutional demand for bitcoin has been seeing the growth that surpasses that of peak 2017. Bitcoin open interest recorded a remarkable 643 contracts in a single day bringing the record to an all-time 5,311 contracts as at June; 17. Another breath of new life to bitcoin is facebook’s intended plan to launch its own version of the cryptocurrency called Libra. The question many might be impelled to ask is how can a rival establishment be good news to bitcoin? The answer isn’t far-fetched if you study the optics well.
Facebook is one of the largest corporations on earth, so having it onboard the cryptocurrency world can only increase the industry’s popularity and acceptance. It tends to add legitimacy to an industry with many controversial issues. Many even see the crypto industry as a den of rogues and criminals and extended form of Ponzi scheme. However, the presence of Facebook can change all that perception, which will subsequently trigger institutional and governments’ acceptance. This might be a game changer for the cryptocurrency industry. When retail investors finally join the party which is very likely, we might be looking at over $20k valuation for bitcoin this year.
photo source: © shutterstock.com by Tom Stepanov
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