Bitcoin has been keeping its bullish run for over a year now, which is the longest monthly winning mark so far. It reached a record of over $28,000 last weekend.
According to Lam of Bloomberg, based on the composite price index that Bloomberg compiled, the cryptocurrency has reached an all-time high record of $28,365 last Sunday before profit taking kicks in that will lead to correction. The overstretched bullish run from October to December is so far the longest since the middle of 2019.
It will not be difficult to expect the price to hit $30,000 soon, says Vijay Ayyar, the head of Business Development of Luno which is a Global Cryptocurrency Company. However, with the extended bullish run pullback is expected as investors take profit, but the correction is most likely in moderation. Around 10% to 15% drops are what is expected.
Bitcoin has grown by 280% year to date
Year to date, the Bitcoin has grown to about 280%, while the Bloomberg Galaxy Crypto Index is up to almost 270% year to date. While most businesses are facing increasing challenges due to the pandemic, Bitcoin has more than tripled its price.
Investors see Bitcoin as a better alternative to protect capital and profit against the weakness of the dollar. Also, Bitcoin recently has attracted growing institutional buyers that push the prices up. Others however, question whether Bitcoin is really a valid investment considering the historical wild rallies followed by deep drops of the digital currency.
Legal in many countries but difficult to regulate
While Bitcoin is legally traded in many countries in the world, regulating it remains a challenge. Investopedia has this to say, that the price volatility of cryptocurrency poses a challenge to analysts and economists because there is no fundamental framework to regulate their price movements.
As the library of Congress (loc) said in their website, that unlike the traditional currencies issued by the monetary authority, cryptocurrencies are not authorized tender in any territory. Thus, its prices are not regulated by any local jurisdiction rather their prices are dictated by supply and demand of the market.
Last week, Ripple Labs Inc. and its top executives were accused by the Securities and Exchange Commission (SEC) for deceiving investors regarding their affiliated token XRP. While the company is planning to challenge the accusation in the courts, the development highlights the stricter oversight on the digital assets.
Ayyar said that at the height of the issues surrounding XRP, investors are moving to Bitcoin and other digital coins.
In spite of the issues surrounding Bitcoin, it remains to be the popular trade on Wall Street as the demand for Bitcoin is relentless. While its prices remain highly volatile, it remains to be attractive to buyers especially during a major dip, says Edward Moya, Oanda’s senior market analyst.