Bitcoin price behavior continues to amaze analysts, as it surged 15%, broke through the $5,000 barrier for the first time since last November, and then settled in above the $4,800 mark to contemplate its next move. Bears have suddenly gone into hibernation, as spring breaks across the northern hemisphere, but crypto enthusiasts are cheering for the first time in a long while. Recent price action indicates that a true bottom has formed in the market, and, although many critics still make a case that all things crypto are unhealthy, analysts are starting to suggest that a major rally may be in the offing.
Have industry fundamentals really firmed up behind the scenes? Per one report from a research company by the name of Flipside, the market is humming: “Flipside’s FCAS 25 index, which tracks the market maturity, developer behavior, and user activity of the company’s top 25 crypto picks, is nearing its highest reading, well, ever. The FCAS 25 currently sits at 794 — giving it an A for Attractive rating. This is 24 higher than when Bitcoin sat at $8,000 last spring, and just shy of its ~804 all-time high set earlier this year. In a comment given to MarketWatch, Flipside’s Dave Balter explained that while stakeholders hear a lot of post-mortems (statements like “the industry must be over,” “crypto is dead,” etc.), “it is far from over, it’s humming.””
Flipside’s Balter has developed a comprehensive model for revealing what other charts and graphs in the technical ecosphere cannot begin to do. His index creates measures for how well the development side of the crypto space is faring, regardless of how Bitcoin prices may be performing, i.e., the collapse in valuations for Bitcoin and its altcoin brethren over 2018. According to Balter, a multitude of developers are “harnessing the blockchain platform as a platform for smart contract and token development, deployment, and subsequent use.”
Balter also factors in the growing interest exhibited in the institutional community from firms like Fidelity Investment, the Nasdaq, IBM, and even global banking enterprises. He also notes the changes that have occurred in the ICO industry, forcing a more classical approach to fundraising, which has enabled a “rise in legitimate developers moving into this space and real teams being built around new use-cases.”
This type of analysis is but one group’s spin on what might be driving current price behavior. Favorable news from the institutional sector has been ongoing for months, but there has been no spike in activity. Positive price movements have been gradual, but steady, a strange description for crypto market action, since digital assets have gained a reputation for volatility, like no other asset class in history. Many pundits have suggested that a gradual accumulation phase has been bolstering market prices, as institutional investors sense the possibility of a long-term payoff in a short period of time.
What are others saying? Brian Kelly, the founder and CEO of the digital currency development firm BKCM LLC, predicted in a CNBC interview that Bitcoin could hit the $6,000 mark soon. He added:
All indications we have, whether it be fundamentals or technical, the quantitative analysis we do, all suggest that we probably have at least started to put in the bottoming process… What’s interesting about this move is it’s happening on improving fundamentals and improving institutional sentiment.
He also noted further that:
Even high net worth individuals, family offices, are starting to take a serious interest. There are a couple major brokerage firms that are rolling out some custody solutions. So there’s quite a bit going on under the surface.
As for positive targets going forward, Arthur Hayes, the CEO of Bitmex, sees $10,000 in the cards before this year is out:
The 2019 chop will be intense, but the markers will claw back to $10,000. That is a very psychological barrier… $20,000 is the ultimate recovery. However, it took 11 months from $1,000 to $10,000, but less than one month from $10,000 to $20,000 back to $10,000.
Bitcoin prices have risen again past the $4,900 in recent trading, but the tale of the tape has been a 15% burst within a single 24-hour period. Movements such as these are usually followed by a quick round of profit taking, which should be expected, but the moves that follow that predictable dip are anyone’s guess. For the time being, crypto enthusiasts are smiling broadly, after having to endure an agonizing year of pain.
George McDonaugh, CEO and Co-Founder of KR1, reacted:
There’s always a myriad of possible reasons why bitcoin has had a surge in price. The fact that there was $415 million worth in short positions on the Bitmex exchange may have been too succulent a target for the market not to move against. There have also been rumours about buying bots going awol after some fake news about an ETF green light from the SEC was released as part of an April fools joke. You literally can’t make this stuff up.
I’d veer towards the first explanation than the second, going by the fact the ETF rumour came out a full 24hrs after the rally began. Moving away from a specific catalyst or event, lately there’s definitely been positive sentiment in the market these last few weeks. There’s a sense that perhaps we’ve reached the lows for this cycle and it’s onwards and upwards from here on in. I think it’s still too early to call it, but it seems that that hasn’t stopped a few eager buyers jumping the starting gun.