After a rather disappointing 2018, Bitcoin prices started recovering in February this year, followed by increasing volumes, lower fees and overall growth. Back then, in our monthly note to investors, we highlighted this trend and reiterated our $5,000 price target for Bitcoin a week before it happened.
Now that we’ve finally reached it, everyone wants to know where we are headed next and whether this could be the start of another 2017-like parabolic bull run.
Firstly, we do not believe a run similar to the 2017 drive can be seen again, at least not in the near future and particularly not in the absence of major catalysts such as global governmental approval and integration with mainstream services and portals. That being said, we do expect steady growth in the years the come, building the foundation for a surge when the timing is right.
Currently, what is important is to understand the current price and its effects. The major event propelling Bitcoin price from $4,000 to $5,000 was a large order, most likely an algorithmic one, which was executed simultaneously on multiple exchanges.
While any such move should be viewed with skepticism, especially if it is not organic or steady in nature, this one did bring considerable momentum to the market. What is interesting to note is that Bitcoin has managed to retain these gains over the past week, and we are seeing consolidation around the $5,200 range. This is a very positive sign, and if it continues for another week or two, could result in an attempt at the $5,500 level.
Meanwhile, we can expect the familiar cycle, where an appreciation in Bitcoin prices results in a ‘spillover effect’ for other digital currencies, particularly the ones closely linked to it – such as Litecoin and Bitcoin Cash.
If we look at prices for both these digital assets since the early February uptrend, to date they have both appreciated over 155% – much more than both Ether and XRP. As Bitcoin continues to consolidate, we can expect further gains in smaller-cap digital currencies, until the market is ready for another Bitcoin push.
However, the current scenario by no means guarantees the start of a new bull run, since there is a very real risk of Bitcoin failing to hold the $5,200 range and re-testing $5,000, especially around the coming weekend, if trading volumes drop. If $5,000 breaks, we are likely to see support around $4,700 – $4,800 and reconsider market sentiment and fundamentals.
Meanwhile, even though the crypto market was slow over the past few months, our direct crypto fund, BitBull Opportunistic, managed to post positive results every month since its inception in November. Our performance is a result of active, market-neutral strategies, such as volatility trading and arbitrage. If you’d like to know more about our crypto funds, you can contact us here, or schedule a call with one of our experts.