Bitcoin’s price has surged back to the $8,000 level again, with more than $5 billion in funds entering the market on June 10th. It isn’t clear what caused this bullish rush into crypto, but it seems to have occurred for most altcoins, with Litecoin experiencing more than a 10% increase in price over the course of the day.
Obviously, this comes with the question: is the Bitcoin bull market back on again? The general trend so far this year has been sideways and upwards, which became more pronounced in April when BTC’ price surged to almost $9,000.
The Litecoin price increase can also be explained by the upcoming block reward halving that will occur in August of this year. This is a deflationary (or at least less inflationary) pressure on the price of the coin that leaves open room for a much greater increase in price.
Bitcoin as a Counter Indicator
Bitcoin’s utility and the world’s interest in the space is continuing to expand as new perspectives are uncovered. For example, wealth advisor Peter Boockvar recently discussed how he viewed it as a solid indicator of market sentiments:
“Over the last couple of weeks, we’ve seen this sharp rise in bitcoin and to me that was saying something in terms of what markets were thinking, about what the Fed was going to do, the turmoil created by the threatened tariffs.”
In these terms, it is almost functioning as a volatility index or signalling mechanism for where the economy (and gold) might go. Boockvar believes gold to be a superior asset to Bitcoin, but seems them as both fitting into the alternative currency portion of the market.
Fundamental Pluses to Bitcoin
At the same time, we have price analysts predicting a $25k price level by the end of 2019. We hear lots of different price predictions, but this one comes with some more fundamental reasoning based on the current economic climate.
Just like the above assertion that Bitcoin functions as an alternative currency, price analyst Oliver Isaacs sees lots of investors buying Bitcoin in the next year as the trade war intensifies. In his words:
“There are multiple drivers behind the recent resurgence. There are geopolitical, technological and regulatory drivers. The net effect of the trade war between the U.S. and China has led to the sudden interest in bitcoin as a hedge on investments.”
Gold has often done well in the past, and now we might wonder if the gold rally that would be expecting during tumultuous times like this might not be split between investments in BTC and gold.
At the same time, gold adoption isn’t increasing, but Bitcoin and cryptocurrency adoption is. We’ve seen Microsoft, Amazon, Starubuck, and Whole Foods announce their intention to accept crypto payments, with Facebook also announcing their plans to debut their own cryptocurrency.
Going back to the macroeconomic climate, with quantitative easing having put the USD in a permanently inflated state, and trade negotiations intensifying around the world, the USD is starting to look like a lot less of a safe haven. There may well be upside to owning USD in the future, but right now it is an inflationary asset that bears a ton of risk.
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