Earlier today, on September 27, the bitcoin price recorded a five percent gain within a 24-hour period, increasing from $3,930 to $4,115.
Bitcoin analysts and long-time traders including Tone Vays and Squeeze have reaffirmed their short-term interim targets of $5,000. Squeeze further emphasized that if the current upward momentum of bitcoin can be sustained over the next few days, it is likely that bitcoin will achieve a new all-time high price in the region of $6,000 within the next month.
Tuur Demeester, another prominent bitcoin trader and investor, also noted that the bitcoin price is breaking its resistance level and if trading volume in South Korea, Japan, Europe and the US hold up, a strong rally in the near future could be expected.
Demand Towards Bitcoin Increases Amidst Global Markets Volatility
Since the beginning of 2016, bitcoin has been adopted as a safe haven asset and long-term investment by both casual and large-scale institutional investors. In periods of global markets volatility and economic uncertainty, investors lean toward safe-haven assets such as bitcoin and gold. Already, the two assets have demonstrated significant increase in trading volumes and prices.
On September 25, various financial news publications including CNBC reported that stock prices in the US, South Korea, and Japan fell substantially after North Korea accused the US of declaring war against its regime. Since then, bitcoin has rebounded from $3,500 to $4,100, by $600 in less than three days.
At the moment, the bitcoin price is struggling to recover beyond its all-time high of $5,000 due to multiple factors, including uncertainty over the bitcoin industry in China and the possibility of SegWit2x hard fork. While the global bitcoin exchange market has almost fully recovered from the Chinese government’s nationwide ban on bitcoin and cryptocurrency exchanges, there still is uncertainty surrounding the imposition of harsh regulations and restrictions on the Chinese bitcoin mining industry.
In a purely logical standpoint, if the Chinese government does not restrict bitcoin mining within China and more bitcoin is produced in the region, it is likely that bitcoin created by local miners will be sold in unregulated over-the-counter (OTC) or overseas markets. The Chinese government would not want bitcoin trading volumes moving to a market that is more difficult to regulate and also, it would oppose any sort of capital moving out of the country.
More to that, while many major companies have begun to pull out of the SegWit2x agreement, a proposal that was developed to increase the bitcoin block size to 2MB, there still exists a possibility of several actors pursuing the activation of SegWit2x in November. Demeester noted that if the market gains confidence that the SegWit2x fork will not occur, the bitcoin price would likely surge.
SegWit2x Uncertainty and Current Bitcoin Developments
It has become evident that SegWit2x is not needed at this stage of bitcoin development and scaling. At the time of reporting, the average bitcoin block size remains below 0.85MB and the size of the bitcoin mempool, the holding area for unconfirmed transactions, is just over 11 million bytes. Prior to the activation of SegWit, the size of the bitcoin mempool surpassed 140 million bytes.
SegWit has already scaled the bitcoin network to a large extent despite the fact that less than 5 percent of all bitcoin transactions are SegWit-enabled. If over 50 percent of transactions become SegWit-enabled in the upcoming months, the bitcoin network will be able to scale at an exponential rate, drastically decreasing transaction fees.
Therefore, it is not the appropriate period in bitcoin development and scaling to request a bitcoin block size increase when evidently, it is not necessary.
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Last modified: June 12, 2020 3:55 PM UTC