Bitcoin Making Impressive Recovery


Bitcoin is soaring past $11,000, two weeks after a spectacular crash saw it fall below $6000. The flagship cryptocurrency is now trading at an average $11,468 on major exchanges and rising. This is a nearly 100% recovery in two weeks, once again proving its highly volatile nature.

Critics didn’t miss a chance to take a swipe at bitcoin in what has been a very turbulent period over the last one year. Mark Carney, Governor, Bank of England said bitcoin “had pretty much failed” both a store of value and as a currency.

“It has pretty much failed thus far on … the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange,” he told students at Regent’s University, London.

Carney does not however dispute the underlying blockchain network which he reckons can be used for many applications. Bitcoin is a decentralised ledger kept in thousands of computers across the world. By so doing, it eliminates the need for third parties like banks in transactions. No one has control over the network.

Record Highs

In December, bitcoin reached an all time high of $20,000 before hovering around $14,000 for a good part of 2018. The crash in February was precipitated by a number of events including harsh regulations from China and banks rejecting bitcoin purchases.

Governments have increasingly grown weary of bitcoin’s growing popularity which directly challenges the traditional financial infrastructure.

Bitcoin has for example gained more than 900% in value over the last one year as more people jostle to get a piece of the fastest growing asset. There is however the genuine need to protect the less knowledgeable from the sometimes damaging volatility and from scams that always accompany such a new sector.

Huge Crashes Not New

Huge plunges have been the hallmark of the cryptocurrency since its inception in 2009. The most recent crash compares very well in scale with the one it experienced in 2011 when it lost over 90% of it value. A subsequent dip in 2013 saw it lose more than 70% of its value.

Bitcoin Down

Sceptics have long been warning of a bubble burst although this has largely been way off the mark.

Based on past behaviour, bitcoin could hit new highs as early as July. Bitcoin’s recovery after the severe crash is giving investors some level of confidence about its resilience and more are expected to pump in money in the coming days and months.

Scalability Issues

Bitcoin’s scalability issues and high transaction fees makes it unfit for everyday use. The cryptocurrency is capped at just 21 million coins. With each unit exchanging for over $11,000 at the moment, it is obviously unsuitable for micro-transactions.

Several forks based on the bitcoin network have been emerging with better properties like faster speeds, low transaction costs and clear use case scenarios.  If a clear winner emerges, it could check bitcoin’s rise.

Other cryptocurrencies are making impressive recoveries too. Altcoins were particularly hit hard during the crash. Their price movements are more or less correlated with bitcoin.

Leave a Reply

Notify of

Risk Warning: Investing in digital currencies, stocks, shares and other securities, commodities, currencies and other derivative investment products (e.g. contracts for difference (“CFDs”) is speculative and carries a high level of risk. Each investment is unique and involves unique risks.

CFDs and other derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how an investment works and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can fluctuate widely in prices and are, therefore, not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Past performance does not guarantee future results. Any trading history presented is less than 5 years old unless otherwise stated and may not suffice as a basis for investment decisions. Your capital is at risk.

When trading in stocks your capital is at risk.

Past performance is not an indication of future results. Trading history presented is less than 5 years old unless otherwise stated and may not suffice as a basis for investment decisions. Prices may go down as well as up, prices can fluctuate widely, you may be exposed to currency exchange rate fluctuations and you may lose all of or more than the amount you invest. Investing is not suitable for everyone; ensure that you have fully understood the risks and legalities involved. If you are unsure, seek independent financial, legal, tax and/or accounting advice. This website does not provide investment, financial, legal, tax or accounting advice. Some links are affiliate links. For more information please read our full risk warning and disclaimer.