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Bitcoin rollercoaster ride offers sense of deja vu

Bitcoin fluctuations are reminiscent of past behaviour- Could history repeats itself?

Encouraging reports about Facebook making plans for a cryptocurrency called Libra triggered a high sugar rush Bitcoin appreciation Cryptocurrencies in general are still viewed as non-traditional financial assets, so the phenomenon around them is still layered in uncertainty If Bitcoin remains below $12000, this could encourage a drop back towards the psychological $10000 level

Written by Lukman Otunuga, Research Analyst at FXTM

Random fluctuations and explosive levels of volatility remain common themes in the world of cryptocurrencies.

Bitcoin’s turbo charged movements in recent weeks continues to highlight its extreme sensitivity to news headlines and market sentiment towards the crypto space. In June 2019, prices surged to levels not seen since January 2018 above $13500 on growing optimism over cryptocurrency being accepted by mainstream. Encouraging reports about Facebook making plans for a cryptocurrency called Libra triggered a high sugar rush Bitcoin appreciation which fueled speculation over prices hitting $20,000 and beyond. 

However, as lessons of the past have repeatedly illustrated that Bitcoin can be incredibly unpredictable. After reaching near the $14000 level, prices have collapsed like a house of cards near June ending as optimism started to fade. 

Related: Bitcoin vs Libra: Competing for leadership as safe havens and future currency

What to expect from Bitcoin in H2?

As we head into the second half of 2019, Bitcoin is bound to remain volatile, unpredictable and sensitive to newsflows.

Cryptocurrencies in general are still viewed as non-traditional financial assets, so the phenomenon around them is still layered in uncertainty with no one really knowing what factors influence them.

I would say however, that what will encourage more interest is the further adoption of Cryptocurrencies. The news that Facebook will look to issue their own version is seen as further adoption may stimulate buying interest in the industry. This could be boosted by major institutions showing interest in the cryptocurrency world.

Other factors that may impact the mood across cryptocurrency are trade tensions, geopolitical tensions and health of the global economy.

Related: Bitcoin continues its rise to $13,000 and beyond: Why the sudden increase in demand?

Is the Bitcoin sugar rush running empty?

Taking a look at Bitcoin’s recent price movements, buyers could be running out of steam. Bitcoin’s depreciation near the end of June could open doors for sellers to take the driving seat as the second half of 2019 gets under way. If Bitcoin remains below $12000, this could encourage a drop back towards the psychological $10000 level. For Bitcoin to stay afloat, an appreciation above $12000 needs to materialize to open a path towards $14000 and possibly levels not seen since December 2017 above $17500.

For more information, please visit: FXTM