Note: “This analysis is an adaptation from the work of Mati Greenspan, Senior Market Analyst at eToro
- Bitcoin total drop now 84.5%
- Nascency of cryptocurrency making it difficult to find fair value
- While house welcomes crypto friendly Mick Mulvaney but is it a good news?
Bitcoin Price Cycles
Cryptocurrency markets have been relentless in 2018. It’s been one year now since bitcoin achieved an outstanding all-time high of $20,155 per coin and today it is testing new lows of $3,122, a total drop of 84.5%. This massive slide in value may seem unprecedented but in fact, retracements of this magnitude have happened no less than four times in Bitcoin’s short history. While all the previous spikes were due to insider information and speculation, the 2017 rise was basically driven by middle class which had turned their savings to cryptocurrencies. In all probability, the next surge is likely to be spurred by Wall Street and institutional investors. The bitcoin futures contracts from CBOE and CME Group were implemented in December, which proved to be too late to catch the last upward cycle. This would explain why the volumes on these contracts have been extremely low so far. Nobody really wants to invest when prices are moving down.
While all this is pretty clear, individuals, as well as institutions, are still trying to figure out what its fair value is. Just because crypto assets are such a new concept, everyone is still finding ways to figure out what the value of them should be. All assets in every market go through price discovery, but due to the rapid growth of the crypto industry, this process of price discovery is currently on steroids.
Mick Mulvaney at the White House- Is it positive?
Blockchain advocates have been celebrating the latest appointment to the White House Cabinet. Mick Mulvaney is a well-known supporter of bitcoin and digital assets and his promotion to White House Chief of Staff is definitely a big win for the community. Mulvaney has not only been on record as supportive of digital assets but has even championed two separate bills designed to hasten their adoption. However, the celebration may be a bit overdone.
President Trump literally became famous for his catchphrase “you’re fired” and it seems his cabinet is no exception to this. As there have been some high-profile firing, Mulvaney is no exception here. While Mulvaney has already begun his term, the ground on which he stands is pretty shaky. The top news story circulating on social media since his appointment is a video in which Mulvaney called Trump a “terrible human being” during the 2016 elections. And any further steps by Mulvaney against the President might also put him in the line of being fired.