The cryptocurrencies have finally begun what could be a significant turnaround. After months of declines, the space saw some decent buying interest last week as investors scooped up currencies and what some may consider to be bargain-basement prices. Bitcoin led the charge, with a sharp rally in just a couple days.
What Is Behind the Move?
Many investors are likely wondering what was behind the big move in Bitcoin last week. Prices covered a lot of ground in a matter of days, and many are probably wondering if the recent rally is sustainable.
This very subject was discussed at length in a recent article by Peter Tchir on forbes.com. He reported that:
- “Several sources are reporting that the prestigious CFA designation will require knowledge about blockchain and crypto. In terms of ‘adoption’ it is impressive that this group, which has to be viewed as serious and conservative, has deemed crypto and blockchain important enough to add to their curriculum.
- More talk about banks looking at various crypto assets and, of course, Larry Fink told media that Blackrock is exploring blockchain and cyrptocurrencies. Markets seemed to ignore his comment that they have not seen large investor demand. I am not overly excited about big banks or investment firms exploring bitcoin or cryptocurrencies as they should make some investment in case it works out. I view this as less of an endorsement and just smart business sense for these companies to be prepared if it grows – rather than they are committed to helping crypto grow.
- It seems that the potential for a Bitcoin ETF has increased again. Whether it is the release of comments being sent to the SEC regarding bitcoin ETFs range from childish and absurd to extremely thoughtful and compelling (I thought that some letters that commented on the fact that GBTC – the Bitcoin Investment Trust – regularly trades at extreme premiums exhibits investor demand and that premium is a problem that would be corrected by a properly run ETF as most valid in trying to convince the SEC). I do think Bitcoin ETFs would encourage new adoption – anyone could buy a couple hundred shares – just in case. It would be a great way to alleviate FOMO (fear of missing out) or as I wrote long ago – it would help with the 5 Stages of Not Owning Bitcoin Grief that many felt late last year. Having said that, I think places like coinbase have made investing in Bitcoin and other cryptocurrencies directly, so much easier, that the benefit of an ETF might not be as great in terms of adding new buyers to the market as some seem to think. Open interest on bitcoin futures contracts remains unimpressive.
- Governments, central banks, supranational agencies are all getting more up to speed on crypto – which is clearly an indication of its importance, but I find most of the comments and statements more cautionary than endorsements – particularly of the current array of cryptocurrencies available (the sheer number of cryptocurrencies is somewhat daunting and to me, is one of their biggest weaknesses, because it does have a ‘me too’ or ‘anything goes’ type of vibe – rather than a perception that ‘this really works for what it is supposed to do.”
The Week in Cryptocurrency Prices
Bitcoin: Bitcoin finally found a bottom-at least for now-for under $6000. The market has since seen some bargain hunters step in, and prices saw a rapid ascent to over $7000. The market is showing some excitement once again, and that could entice further buying activity as investors may not want to miss out on a potential move higher.
Bitcoin Cash: This crypto has been primarily range-bound again this week, and seems comfortable around the $720 level. Oddly, it has thus far not been dragged higher despite higher Bitcoin prices, but that could change.
Ethereum: This crypto continues to show little upside in recent action, and will need to overcome some resistance in the $480 and $540 areas before possibly seeing more sustainable upside. Like other currencies, it has been mostly drifting in recent weeks as the notion of additional regulations and other factors have taken a toll.
Ethereum Classic: This crypto continues to languish around the $16 level, and has not yet shown any real bullish signals.
Litecoin: This crypto has not had much to get excited about in recent weeks, and the market has seemingly been intent on probing new lows. The currency did find a recent low around the $76 level, however, before seeing a decent bounce higher. The currency’s lack of upside in recent days may yet be another example of Bitcoin’s dominance in the sector.
Ripple: This crypto traded in a very tight range for most of the week, and also looks to be looking for a bottom in price. The currency has hung around the $.44-$.48 area in recent sessions, and investors have shown little interest.