Bitcoin price weekly analysis: Encouraging signs

Rhys Muter 4 February 2018 NEWS

Encouraging sign - ITIConfidence 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.

Price movement

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.

Market capitalisation

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.

Screen Shot 2018-02-04 at 12.33.46

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.

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.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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