Investors in Bitcoin celebrated at the end of April, with the month ending in over 30% gains for the cryptocurrency. That meant Bitcoin had its first three-month winning streak since the last quarter of 2017, making it something of a vindication for those who signalled the end of the bear market on the digital currency at the start of 2019.
April’s closing price was $USD 5,392.47 (approx. $AUD 7,647), up from $4,112.69 at the end of March, and $3,823.37 and $,3,434.13 at the end February and January respectively. Bitcoin is up almost 44% in the four-month period from January to April 2019.
Obviously, the volatile nature of the cryptocurrency and its history means that investors are still somewhat split regarding its short-term and long-term future. Bitcoin dropped 26% and 32% in January and March 2018, coming after those fabled highs of the final quarter of 2017 when it surged a massive 1400%.
Mixed signals on buying and selling
There are clearly some questions over what your next move should be if you are interested in investing in Bitcoin. The GTI Vera Convergence Indicator, a tool used by investors to highlight trend reversals, sent a ‘sell signal’ on Bitcoin last week. Other events showed just how sensitive the cryptocurrency market can be, with the entire digital currency market rattled over a spat between the New York AG and the operators of Tether and the Bitfinex exchange, wiping an estimated $10 billion of the combined value of digital currencies.
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Yet, with Bitcoin, we know that the normal rules don’t always apply. Not for the first time, Bloomberg has described Bitcoin’s charge as a ‘mystery rally’. Moreover, senior market analyst at eToro, a social trading platform that lets you buy and sell Bitcoin, told Bloomberg that “The Tether debate does seem to have some people nervous, but not about Bitcoin”, adding “The most likely reaction would be for investors to swap their Tether for Bitcoin.”
Positive signs at base level
Indeed, while something like the Tether scandal – the stablecoin operator was accused of colluding with Bitfinex exchange to cover up loses of $1 billion – can cause negative shockwaves through the crypto market, and as pointed out Bitcoin shrugged off the issue, the reverse can also be true. Signals for mass adoption and mainstreaming of cryptocurrencies, or the blockchain technology they are built on, can push the value of Bitcoin and other cryptos significantly higher in a short space of time.
What is sometimes overlooked about cryptocurrencies is what is going at the development level. For example, it might surprise some investors to learn that the number of developers working on Bitcoin’s core protocol is around 50 developers per month. 50 core developers for a digital currency with a market cap of around $100 billion USD at the time of writing. Yet, a report in 2018 showed that 42% of the world’s top 50 universities now offer at least one class on cryptocurrency. Just as the computing courses in early 1970s led to an I.T. revolution, universities embracing crypto could have a revolutionary impact on their future.
David Yemack, who teaches one such cryptocurrency class at NYU, said “A process is well underway that will lead to the migration of most financial data to blockchain-based organisations”. These types of pushes towards mainstream adoption can buoy the price of Bitcoin, but also ensure long-term investors that their asset is not built on sand.