Bitcoin and the cryptocurrency markets surprised the entire crypto-community on 2nd April with a breathtaking bullish candle pushing the price above $5000. However, there was no specific reason or momentum that brought the change.
Probably the only thing that explains the rise in Bitcoin [BTC] is the fact the Bitcoin had attained near $20,000 valuations during the 2017 bull run. Technicals analysis also suggest that the bottom on Bitcoin might have formed already.
Moreover, if a comparison is made with the graphs for the 2015 bear market an analogy can be created with the current situation of the market. We can find a similar move made by Bitcoin after bottoming in January 2015.
While the price of Bitcoin was ten times lower during 2015, the range of the action was limited between $300-$500. The price of Bitcoin on 2nd November 2015 registered a high of $373 and a low of $326.
A sudden bullish move was registered on 3rd November 2019 with a High of $504. However, the price dropped the second day immediately, and on 5th November the High on Bitcoin was $450 with a low of $370. Later the price fell to a low of $300 before the second consolidation phase began in Bitcoin. Hence, forming the perfect ‘bull trap.’
Moreover, the fundamentals surrounding Bitcoin hasn’t improved much as well suggesting that the bullish move might have an isolated source.
A decent amount of progress has been made since last year around Bitcoin and cryptocurrency. However, the transaction fees of Bitcoin on most popular cryptocurrency exchanges and wallets is still around 0.0005 BTC or around $2-2.5 according to recent rates of Bitcoin. This would be the same for sending a dollar transaction too. Hence, Bitcoin is not suited as a universal payment system. Moreover, the progress made on Lightning Network is also limited as its not mainstream yet.
The total number of daily transactions on Bitcoin has also been steady since 2018. There hasn’t been any significant improvement in the transactions to replicate the bull run of 2017 just yet.
As an Asset Class
While there is no doubt that Bitcoin has more utility than gold as a store of value, the Federal Institutions and Regulatory body around the world specifically the US has maintained its ‘wait and watch’ approach. The two Bitcoin ETF application filled this year have been delayed until May. Moreover, the SEC has been prone to postponing the decision on many occasions in the past. Hence, if the deadline on May is also surpassed it won’t be a surprise.
The Bakkt platform announced by the parent company of the NYSE (New York Stock Exchange) has been delayed indefinitely with no apparent progress or launch date. Initially, the platform was expected to be launched sometime during December 2018 – January 2019.
Most of the countries out the US have also taken a ‘wait and watch’ approach. The Central Banks and Federal institutions aren’t allowed to deal in cryptocurrencies. Moreover, Bitcoin is not accepted as an asset class in most countries; only varying degrees of trade and investment has been allowed. China and India have often placed strict laws on Bitcoin and cryptocurrency trading. Russia and Korea have also delayed its approval or disapproval on Bitcoin as a valid asset class.
Last but not least, the volume of the Forex Exchange in the world is around $5 trillion while that of Bitcoin is approximately $80 billion. Hence, it only suggests that crypto might not be ready for another bull run just yet.