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Bitcoin Crests $10,000, Silencing Critics and Kicking Off Crypto Summer

Last Updated March 4, 2021 2:36 PM
P. H. Madore
Last Updated March 4, 2021 2:36 PM

By CCN.com: Propelled by increasing retail adoption bolstered by Facebook’s Libra announcement, bitcoin is officially over $10,000 across markets.

The Long Road to the Next All-Time High

On Coinbase, where much retail adoption takes place, the price rose from just under $9,300 to nearly $10,000 by mid-afternoon. Bitcoin markets being open around the clock, the price finally touched $10,000 again on Friday evening.

bitcoin chart
Bitcoin crossed $10,000. | Source: TradingView 

Bitcoin has not seen this price in over a year. One year ago today, bitcoin traded for about $6,753 on Coinbase. The rate had declined almost 75% from its all-time high of around $20,000 just six months earlier.

Supply and demand play a significant role in bitcoin markets. There’s no telling what the going rate will be if billions of people get involved. With an estimated network of fewer than 500 million users, bitcoin has sustained a price of over $1,000 since early 2017. If Facebook Libra brings the recognition to cryptocurrency that many expect, it’s possible that $10,000 or more will be the new “bottom” for bitcoin moving forward. As Waschman Senior Analyst Adam Badrawi told CCN.com:

“Those without a historical understanding of bitcoin will likely chalk up its recent resurgence to a perfect storm of bullish news – and they might be right. The oft-repeated mantra that ‘institutions are coming’ seems to be coming true, with powerhouses like Facebook, Fidelity, Baakt, and more outlining increasingly definable product entry points into the crypto markets. As many traders and investors see it, even if Facebook’s Libra project does not provide a clear path to onboard new money into bitcoin via direct trading pairs, the fact that millions (perhaps billions) of people will suddenly be exposed to cryptocurrency wallets could result in a spillover effect into the bitcoin markets.”

How Do We Stay Here and Beyond?

Several factors play into maintaining the price.

One, a change of heart in long-term holders might approach as the price goes 200% and 300% from where it is today. With over 55% of long-term holders never selling a single coin, the real liquidity of the market is quite uncertain.

Two, related to the first, is the prospect of mass bitcoin acceptance. If long-term holders can suddenly use their bitcoin in useful ways – paying off loans, bills, etc. – without having first to convert the coins, then many of those retailers will likely place downward pressure on the price by instantly selling. This would be a constant until such a time that those retailers can fulfill their own needs with bitcoin, as well, at which point society is considered to be in “hyperbitcoinization.”

Three, new money entering crypto will not necessarily pledge allegiance to bitcoin. In most market cycles, the money eventually filters to bitcoin, but this time could be very different. If we base our projections on the massive adoption brought about by companies like Facebook, then ease of use, speed, and transaction fees will play a significant role in people’s exploration.

Will bitcoin necessarily be the favorite for most new crypto investors? No. Therefore, we can expect days when bitcoin’s gains are effectively smaller than some of its alternatives.

If people like Tom Lee are correct, the coming weeks will be filled with FOMO buying. Lee says that cryptocurrency skeptics will be catching “fear of missing out” this week.

If that indeed happens, we can expect further multi-hundred dollar pushes by the day.

However, if we consider this $10,000 mark to be a “recovery,” then there is an alternative situation where last year’s $10,000 run repeats itself. Bitcoin rebounded above $10,000 briefly but then began a relatively quick decline within the month.

Whatever happens, crypto winter seems to be over — bitcoin’s at the 50-yard line. Many people were confident it would make it this far. But where will it be after its next touchdown?