Bitcoin price weekly analysis: Encouraging signs
Confidence buoyed as market dominance goes up even while price goes down.
- Bitcoin market cap goes up as rest of market heads south
- Bitcoin continues run of price losses
- Lightning Network continues gathering pace
The buzz in the bitcoin community this week has been the ongoing expansion of the Lightning Network, which in future could allow real time transfers of bitcoin and very low transaction costs. The community is hopeful that mass adoption is still a potential with that development. However, the benefits of this could be months, if not years away.
While bitcoin price took another tumble this week its strength has been shown as its market dominance peaked. This is in contrast to the rest of the cryptocurrency market, whose market dominance as a share of total cryptocurrency market cap, took a serious dive.
Bitcoin began the week trading at US$11,440.70 after a month of sustained downwards pressure on its price, according to pricing information released by CoinMarketCap.
Those who had hoped the trough had been reached were disappointed midweek as bitcoin continued its downwards track, dropping to a weekly low of US$7,830.12. Bitcoin has not registered that price since 21 November 2017, as the bull run leading up to the holiday season was in full swing.
Bitcoin closed out the week at US$9,139 with a tapering of 24 hour market volumes, seeing the bitcoin price going sidewards on the charts allowing markets to catch a breath.
Bitcoin’s market cap took an absolute hammering throughout the week dropping from US$192.5 billion to a low of US$131.8 billion. The sustained drop represents a negative 31.5% drop from the week’s promising beginnings.
Incredibly, bitcoin’s overall market dominance had a positive week, gaining slightly from 34.36% to 34.52% of total cryptocurrency market capitalisation. What this could show is that confidence in bitcoin remained steady when compared to all other cryptocurrencies.
To back that up, there was a mid week event which saw bitcoin’s total market cap dominance grow to 37.73%. While that increase happened, the rest of the cryptocurrency market saw a dip in market dominance (see the graph above).
For example, Ethereum dropped from a week’s high market dominance of 23.47% to 21.21% as bitcoin was hitting its strides.
24-hour trading volume
Trading volumes began the week somewhat relaxed trading in a US$7.5 billion range before dropping off in midweek trading to around US$6.6 billion. Soon after that, trading volumes were to pick up substantially in response to downwards pressure on bitcoin.
Shortly after bitcoin had reached the week's trough 24-hour trading had climbed to as high as US$13.8 billion.
In the public eye on Saturday, Alistair Milne tweeted 45,500 followers in defence of bitcoin suggesting that price will be connected to bitcoin adoption amid much scepticism.
I estimate that Bitcoin is at ~1-6% adoption, depending on the country
Adoption may temporarily slow down, but it won't stop here (far too early)
Anyone betting that the price will not correlate to an adoption curve is going to be disappointed pic.twitter.com/GC14tqrgbE
— Alistair Milne (@alistairmilne) February 3, 2018
There is a large body of investors speculating on bitcoin who are not using bitcoin as money. Going against that there are those who hold that bitcoin could replace national currencies. Milne believes in the potential for bitcoin to replace national currencies and that by that happening bitcoin will increase in price in the process.
To put that in perspective, that event would be the first time that has ever happened in the history of money.