Look at cryptocurrencies today, and you’ll see mostly a green board, with the caveat that Ripple’s XRP has edged down slightly. For its part, Bitcoin is back up toward $3600 with some analysts contending it’s poised for a greater run.
“The probability that Bitcoin matches its all-time high price again and doesn’t then continue past it seems very low,” says Alistair Milne, according to Marie Huillet’s coverage at Cointelegraph today. “Each wave of adoption is an order of magnitude bigger than the last.”
Huillet also cites Bloomberg’s use of a current signals indicator called VERA:
“Having reportedly breached its lower VERA band limit yesterday, Bitcoin quickly rebounded to trade just above it — a behavior that Bloomberg suggests could signal a short term price surge,” Huillet writes.
However, Bitcoin remains extremely low considering past highs – just a few months ago, Bitcoin was “very stable” at $6500, and last year it was up to $20,000 – imagine buying one Bitcoin at $20,000 and seeing it decline like that. One would hope that most of these luckless traders are buying and holding for a return to past highs like Milne mentioned.
However, for those who aren’t into Bitcoin at the moment, $3600 months from now might seem like an advantageous entry point into some lucrative profit-taking in 2019, 2020 or 2021. You can almost apply penny stock ideology to Bitcoin right now, in the sense that it will either dwindle lower or, over time, rebound to its past highs with growing buy-in and acceptance. Detractors cite volatility, but as the season stock trader knows – volatility will always be with us.
Of course, there are the counter-narratives, as in this Forbes piece by Jay Adkisson arguing that Bitcoin is really volatile because of its ethereal nature.
“The problem with buying a Bitcoin,” Adkisson writes, “is that it doesn’t generate a return, but is simply an internet token that is used as an alternative to transfer money between its users … In other words, Bitcoin has no fundamentals, and will never have fundamentals.”
Then again, others indicate that lack of liquidity can contribute to BTC volatility.
“Numerous analysts have asserted that bitcoin suffers from liquidity problems,” write analysts at FCXM, “which could in turn be contributing to bitcoin’s sharp volatility. Having less liquidity—instead of more—can potentially exacerbate price fluctuations, making it so that the digital currency’s inevitable declines are more severe than they would be otherwise.”
In that case, liquidity problems are not forever. We have been reporting on ways that institutions are slowly starting to legitimize Bitcoin in ways that will help with liquidity and other factors. That’s not a promise of anything, but it helps to explain why, in the face of the volatility, many traders are still “Bitcoin bullish.”