Overnight, Bitcoin crossed another really important milestone. It ended the strong week by spiking above $5,000 for the first time in its storied history. This was not something unexpected as many industry professionals had predicted this. Although, most of these predictions were for this level by the end of the year.
Although Bitcoin has had a strong run over the last few weeks after the hard fork, this meteoric rise seems to be as a result of general geo political risk. We have also seen the rise of other safe haven assets as the general “risk off” sentiment has enveloped the market.
Yet, as quickly as the currency crossed this important mark, it appeared to retrace again. This was most likely as a result of a number of limit orders that were set to execute at the $5k level. The price fell by as much as $400 but seemed to stabilise at around the $4,700 level.
If one is a believer in Elliot Wave theory then you should indeed take the opportunity to buy on the dip that has presented itself.
This was not only the case for Bitcoin but also happened with Ether. We saw that after the massive sales on Bitcoin that some large block sizes on ether were sold as well. Perhaps they were the same holder who was looking to exit their investment?
Mainstream Adoption
Bitcoin has also received a lot of attention from the mainstream media and well known institutions. For example, companies such as CNBC and Goldman Sachs have claimed that investors should buy the currency. They set a price target of $3,600 as a floor and the best time to buy.
Of course, the news about the successful adoption of segregated witness that aimed to adress the many concerns people had about scalability. As that was put out of the way, more retail investors were aware of the immense scalability in the currency.
From a liquidity perspective, this was also a really important month. The news that the CFTC had authorised a Bitcoin regulated futures market gave impetus to the belief that a Bitcoin ETF is also around the corner. This would no doubt be a momentous event for Bitcoin as it would mean that ETF trackers would have to include Bitcoin in their portfolios.
Rumours of the eventual authorisation for an ETF were perpetuated by the SEC's move to hire an individual from the Ropes & Gray law firm to head up the ETF division. Ropes & Gray were the law firm that helped the Winkelvoss twins in their endeavour to secure a Bitcoin ETF. This, as many may know, was unfortunately not moved upon by the SEC.
More Upside?
Bitcoin has had one of the most impressive bull runs recently starting from a low of around $416 in August 2016. This is the case for the entire crypto currency market in general with the market cap going from $16bn to $170bn in a mere 9 months.
Many investors such as John McAfee have predicted this $5,000 level and have been staunch believers in their predictions. There are of course a number of other analysts who are of the view that things appear to be in a bubble. These concerns were raised even when Bitcoin went above $3,000 earlier this year.
Whether Bitcoin can continue its rise is not immediately certain. The $5,000 level is of course an important psychological barrier that people feel was holding sway in general perceptions. Hence, there is the possibility that it will continue its advance towards the $10,000 level. If you were to listen to some of Bitcoin's most ardent supporters and traders such as Masterluc who predict a $40,000 the motivation for buying is stronger.
There are also concerns that more traders will be taking profit as they attempt to realise gains on this bull run. What is no doubt clear is that if you thought that August was an exciting month for Bitcoin then September may surprise you.
