Bitcoin Passes Resistance Level, Remains Bullish…For Now
Bitcoin is the largest cryptocurrency by market cap, at $70 billion. It is also the most well-known of the hundreds of cryptocurrencies out there. Like all cryptocurrencies, bitcoin has been on a volatile ride, with optimistic analysts seizing on any upticks, hoping for a bull run. For technical traders, bitcoin just passed an important resistance hurdle and is trading at its highest levels in over a month. Does this mean bitcoin is heading for a bull run or is just the wishful thoughts of bitcoin and cryptocurrency bulls?
Investors love cryptocurrencies like bitcoin because of the untold riches early investors enjoyed. And the hopes that those heady days will return. And why not? Just look at what bitcoin has done over the last two years. In early 2017, one bitcoin was worth $1,000; in December, it hit an all-time high of $19,511. It was a different story in 2018, those who didn’t take profits were in for a shock; bitcoin ended 2018 at $3,700—a decline of more than 80%.
That kind of roller coaster ride would test the nerves of the most seasoned investor. Still, investors are pouring their money into cryptocurrencies hoping to ride another strong ascent. Bitcoin recently gave investors reason to hope.
On February 19, bitcoin passed through its 100-day moving average for the first time in 127 days, it also hit a high of $4,002.71 on Tuesday; its highest level since late December. Over the last week, the value of a bitcoin has surged 10.5%. What’s going on with bitcoin and does this mean its heading for a bull run?
Is Bitcoin on the Verge of a Bull Run?
There are always diverging opinions on why or why not bitcoin or cryptocurrencies are on the move. JP Morgan, the big American banking giant, recently announced plans to launch its own cryptocurrency. Each JPM Coin will be worth USD$1.00, which helps avoid inflating prices and volatility.1
While some might see this as a direct competitor to bitcoin, it’s important to note that JPM Coin is only going to be used for internal online payments at the bank. It is not available for trading on Forex markets. On top of that, the broad-based adoption of blockchain technology gives long-term validity to cryptocurrencies like bitcoin. If blockchain wasn’t the future, big banks like JP Morgan wouldn’t be creating their own cryptocurrency.
Second, bitcoin could be on the move thanks to the U.S./China trade war. President Donald Trump arbitrarily picked March 1 as the trade deal deadline. If that deadline passes and there is no trade deal with China, the U.S. will raise tariffs on $200 billion-worth of Chinese goods.
That would put additional strain on the world’s two largest economies; the uncertainty would also be a boost for bitcoin prices.
Bitcoin prices are up, but until the cryptocurrency breaks above $5,000, which is more a psychological level, it looks like the cryptocurrency bear market will continue.
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- “Why has J.P. Morgan launched a cryptocurrency?”, The Week web site, February 15, 2019; https://www.theweek.co.uk/cryptocurrencies/99618/why-has-jp-morgan-launched-a-cryptocurrency-bitcoin-ethereum.
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