Bitcoin weekly analysis: Bitcoin price is going up
Investor confidence in bitcoin remains strong after a recent drop in price.
- Bitcoin loses US$2,000 in seven hours and then regains US$1,000 in the same day
- Bitcoin market capitalisation remains strong and continues to grow
- Alistair Milne backs bitcoin to the hilt
- Positive signs for bitcoin future growth
Bitcoin started the week buoyed by investor confidence and an unrelenting influx of capital into the global cryptocurrency markets. The price gauge began at US$13,730.20 with a 24-hour trading volume of US$10.4 billion, and after a tumultuous day, bitcoin stood at US$15,383.30 with a 24-hour trading volume of US$18.5 billion.
Bitcoin market capitalisation began the week at US$230.3 billion but closed out the week at US$253.3 billion, a gain of US$23 billion.
An interesting development that has significantly affected the price of bitcoin and the broader cryptocurrency market occurred on 08 January. A reputable source of price data, CoinMarketCap readjusted their price and market capitalisation accounting methods to exclude data from South Korean exchanges.
This move has been significant for several reasons. First, this readjustment has caused some confusion since CoinMarketCap's market cap is no longer based on a global average price. Second, this is believed to have caused the price of bitcoin to drop nearly a full US$2,000 per unit from US$16,171 at 8:00am UTC to US$14,208 at 3:20pm UTC. This is an extreme example of market volatility given the seven-hour time period.
It is unclear whether this drop in prices can be fully attributed to CoinMarketCap’s accounting readjustment or whether there was a genuine correction in the market. Having recovered nearly a full US$1,000, the readjustment has done little to stifle market confidence in bitcoin.
Alistair Milne, a bitcoin bull, has tweeted in support of bitcoin saying that “the market tells you clearly which coins they trust the most in turbulent times.” This statement is hardly surprising from a bitcoin bull. However, if 24-hour trading volume is anything to go by, his sentiment is well founded.
There has been a remarkable increase in bitcoin's 24-hour daily trading volume over the last three months. In the month of October 2017, the average 24-hour trading volume for bitcoin was between US$1-2 billion. Over the last month, the lowest the 24-hour trading volume for bitcoin has declined to has been to US$9.5 billion. That staggering number is showing no sign of decreasing.
As this event has unfolded, there has been a broad decline across the biggest altcoins. The biggest of these changes has seen Ripple (XRP) replaced by Ethereum (ETH) as the second largest cryptocurrency in terms of market capitalisation this week. ETH and XRP have both decreased with CoinMarketCap’s readjustments.
Going ahead, this is a positive signal for bitcoin bulls because there is a growing body of evidence that supports the idea that bitcoin is indeed a store of value – and quite a handy one at that, especially in times of market turbulence.