After a precipitous Bitcoin price drop to $7,800 — a level which analysts have said will make or break the cryptocurrency bull run — on the weekend, investors were running scared. There were many prominent traders calling for $6,500.
But at the 11th hour, when all seemed lost, bulls stepped in. Since Monday, the leading cryptocurrency has recovered by some 10% to $8,600. Here are what analysts say is behind this move, and arguably more importantly, what could come next for Bitcoin.
What Boosted Bitcoin?
According to Josh Lim, head of trading strategy at Galaxy Digital, this recent recovery can be partially attributed to announcements made at Devcon, a prominent industry conference that focuses on Ethereum development.
In a comment to Bloomberg, Lim remarked that updates regarding Ethereum’s Serenity iteration — a new version of Ethereum slated to promote massive adoption due to scaling solutions — and the unveiling of new apps on the blockchain has likely provided bulls with reasons to buy.
Lim also claimed that fundamentally, demand for Bitcoin has “[started to] pick up in the market”. He claimed that the growing level of interest in the cryptocurrency “coming out of emerging market economies” is due to “unrest in other parts of the world.”
Joe DiPasquale, CEO of the cryptocurrency hedge-fund firm BitBull Capital, had a bit of a different take. Speaking to industry publication CoinDesk in a Youtube interview, he suggested that hopeful comments from Bitwise Asset Management regarding its Bitcoin ETF application has bulls enthused.
As reported by Blockonomi previously, Bitwise’s head of research, Matt Hougan, said that his firm is “closer than ever” in ensuring that a Bitcoin ETF gets through the U.S. SEC’s gauntlet.
Backing his point, Hougan looked to the strong developments in cryptocurrency custody, market liquidity, and asset class regulation. (Bitwise’s ETF application has since been denied by the SEC, which claims that the Bitcoin market may still be susceptible to manipulation.)
In an attempt to further rationalize Bitcoin’s price spike, DiPasquale looked to a recent decision made by the Federal Reserve affecting Bitcoin. On Tuesday, the Fed’s chairman, Jerome Powell, revealed that the organization would resume the growth of its balance sheet.
While Powell noted that this isn’t quantitative easing — a monetary policy that some have said is a key reason why Bitcoin matters — many in the Bitcoin community have said that this latest decision only accentuates the cryptocurrency’s disinflationary, non-sovereign, and decentralized nature.
Market Still Strong
Although the Bitcoin bulls have taken a breather, leaving BTC at $8,500, there are a number of analyses that say that the cryptocurrency may soon resume its crusade higher.
Last week, Bloomberg reported that a key technical indicator recently issued a “buy” for Bitcoin. The GTI Global Strength Indicator, “a measure of upward and downward movements of successive closing prices,” in fact, flashed a bullish signal for the first time since Bitcoin bottomed at $3,150 in the middle of December.
Considering the historical importance of this indicator, the recent observance of a buy may be a sign that Bitcoin’s multi-month correction from $14,000 has finally bottomed out.
Separately, Santiment’s social volume indicator was noted by Santiment to have “continu[ed] its quiet decline after hitting a recent two-year low.” Indeed, BitInfo recently noted that the use of the “Bitcoin” hashtag fell to a three-year low after peaking earlier this year during the pseudo-bull run in May/June.
While many see this as a sign that Bitcoin will only fall further, even further than 40% from the year-to-date top of $14,000, Santiment argues that this can be interpreted as bullish. The firm wrote that historically, “low social volume has preceded large price upswings and bull runs, and high social volume has been [a] fairly reliable top indicator.”
#Bitcoin $BTC's social volume continues its quiet decline after hitting its recent 2-year low. Historically, low social volume has preceded large price upswings and bull runs, and high social volume has been fairly reliable as a top indicator. https://t.co/4kl8hsb9Pk pic.twitter.com/z84qpJpk79
— Santiment (@santimentfeed) October 8, 2019