Yesterday bitcoin was just over $7,000 and as I sat down to write today, it was over $8,000. Indeed, the altcoins like ETH, LTC and XRP had also risen significantly overnight. It’s remarkable to think that it is not that many weeks since bitcoin’s price was under $4,000 and now it has doubled.
It’s because of Facebook
The question everyone always wants the answer to is, “What is making bitcoin’s price surge like this?” Billy Bambrough attributes it in part to Facebook ramping up its plans for a token to rival bitcoin. He reported in one of his articles that Spencer Bogart, a partner at venture capital firm Blockchain Capital, said that Facebook’s plans had “lit a fire in the pants of every major [financial technology] and financial institution in the U.S.” Bogart also believes that Facebook’s move into the crypto arena “will be a catalyst for mainstream bitcoin and cryptocurrency adoption around the world, spurring other financial and technology companies to get into bitcoin and crypto.”
Relative strength index is up
Bambrough also says in another article: “Bitcoin’s relative strength index (RSI), used to identify the momentum behind asset prices, this week registered its highest value since the beginning of 2018 — shortly after bitcoin hit its all-time highs.”
What we have seen since bitcoin hit its massive high of $20,000 in December 2017, has been a lot of discontent with the crypto market and a stalling of adoption by major retailers. Still, the leading cryptocurrency always has its stalwart supporters, such as Mike Novogratz and other bitcoin bulls. Their price predictions, while not yet achieved, look a little more likely to happen than they did only a couple of months ago.
Bitcoin follows a pattern
Indeed, analysts from investment bank Canaccord Genuity said they expect bitcoin to rally hard over the next 24 months, potentially returning to its late 2017 highs. They believe that next year’s halving of bitcoin, which reduces the return to miners by 50%, could be one of the reasons that bitcoin’s price keeps pushing higher.
Canaccord’s analysts also noted that what we are seeing right now is “the striking similarity in bitcoin’s price action between 2011–2015 and 2015–2019.” What they are pointing to here is that bitcoin appears to have a four-year cycle, which is related to its halving that also happens in that same time period. They also predict that there may be “a slow climb back toward its all-time high of ~$20,000, theoretically reaching that level in March 2021.”
And there is one other thing happening at the moment that could be benefiting bitcoin’s price, and that is the US-China trade war over tariffs. While the digital assets market is soaring, the stock markets are falling, especially after China announced tariffs on American goods in a tit-for-tat reaction to Trump’s tariffs on Chinese products.
As ever, it is a combination of things that is contributing to the surge in bitcoin’s price, but it is hard to say which one of them is having the greatest effect.