For two straight days, the cryptocurrency market has continued to demonstrate signs of short-term recovery. Although volumes remain low, the price of most major cryptocurrencies like bitcoin, Ethereum, Ripple, and Bitcoin Cash remain relatively high.
Earlier today, on Feburary 13, bitcoin surpassed the $9,000 mark for the first time since February 10. While bitcoin has not been able to recover beyond $10,000, which many analysts consider as the psychological threshold, bitcoin has recorded an optimistic weekly performance.
In the beginning of the week, on February 6, the price of bitcoin dipped below $6,500, moving dangerously close towards $6,000. Today, the price of bitcoin remains well above $8,000, and it is preparing to initiate a short-term rally to break the $9,000 mark.
Bitcoin and other major cryptocurrencies are in an ideal position to record new gains in the upcoming days. But, the volumes of major cryptocurrencies must hold up. Over the last 12 hours, the daily trading volume of the market in general has been relatively low, and bitcoin will need more volume to breakthrough $9,000 and prepare recovery towards the $10,000 mark.
There exists optimism surrounding the short-term performance of bitcoin and other major cryptocurrencies, given the enthusiasm of investors in the traditional finance market. Even though bitcoin and cryptocurrencies as a new asset class has been introduced to the traditional finance market in the form of futures, the majority of institutional investors remain uninvested in the asset class.
This week, JPMorgan, one of the largest banks in the world with a $380 billion market valuation, noted in a cryptocurrency paper entitled “JPMorgan Perspectives: Decrypting Cryptocurrencies, Technology, Applications, and Challenges” that bitcoin and other cryptocurrencies will have an important role in diversifying one’s global bond and equity portfolio.
The JPMorgan report on the cryptocurrency market delved into the correlation between technical developments and price of cryptocurrencies, and explained that minimizing risk in cryptocurrency investment by diversifying assets is crucial. The report read:
“The excitement of innovation typically also leads to price booms and then crashes among the early movers, before more realistic prices emerge among the eventual survivors. Much of this is what we see today with exponential price gains and losses, growth and diversity among cryptocurrencies. Given the amount of speculation in these markets, technical signals can be very useful in gauging market direction and they have been sending the right signals in recent months.”
Exposure of investors in the traditional finance market to the cryptocurrency sector through reports like JPMorgan’s “bitcoin bible” and introduction of markets such as bitcoin futures and exchange-traded funds (ETFs) could lead the price of bitcoin to increase in the mid-term.
Ethereum, Ripple, and Bitcoin Cash, the second, third, and fourth largest cryptocurrencies in the market, have followed the price trend of bitcoin over the past week, since most cryptocurrencies tend to follow the price trend of the most dominant cryptocurrency in times of extreme volatility.
Ether, the native cryptocurrency of the Ethereum network, is also trying to rebuild momentum to regain its position above the $1,000 mark, similar to bitcoin. But, until volumes recover, it will be difficult for major cryptocurrencies to secure their psychological thresholds in the upcoming days.
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Last modified: March 4, 2021 5:04 PM