Category Archives: Blockchain, FinTech & Crypto

Bitcoin: Could 100K Be New 10K?

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Bitcoin: Could 100K Be New 10K?

Naeem Aslam

3-4 minutes

I cover commodities, FX, equities in developing & emerging markets.

There was only one dominant talking point over the weekend and that was Bitcoin. The crypto king blasted the $10,000 level and made a new 2019
high which stands at $11,251. Although, it has retraced from that level and is currently trading at $10,757.Nonetheless, this is a strong comeback and everyone has been waiting for this for a long time. From a price perspective, Bitcoin has recovered more than 50% of its losses from its all-time high of $20,000.

The strong resurgence in the Bitcoin price is mainly due to the renewed mainstream interest in cryptocurrencies and the technology that underlines it. Projects like Facebook’s Libra have provided a much-needed tailwind for this space.

In my previous research,
I mentioned that a move to the upside could be highly volatile due to speculators holding a large number of short bets as per the CFTC data released last Friday. The large number of short bets gave birth to a
short squeeze. The below chart shows the large number of short bets for
Bitcoin: Non-commercial net contract bets confirmed an increase in short
interest while the price was up nearly 214% from its 2018 low.

Nevertheless, the most important thing was the 24-hour volume for bitcoin, it was at its highest level since December 2007 when the price was trading at $20,000. This shows that the game is on because of the mainstream enterprises jumping in this space, due to investors not
losing their interest when the first bubble busted. They simply moved on the sideline waiting for the next bull run to start.

The Google Trend search for “Buy Bitcoin” shows that the largest number of searches are
coming from mostly African countries with Nigeria taking the top place followed by South Africa and Ghana. However, the overall trend is still well below the level seen back in May 2009. This confirms that the surge
in the Bitcoin price is mainly due to the institutional participation.
One can only imagine where the price will move when retail investors jump back in this space with full enthusiasm.

In terms of volatility, the beast is unleashed once again. Back in October 2018, Bitcoin’s 10-day volatility was lower than the S&P 500 index and the Nasdaq, it did drop below the S&P500’s 10-day volatility in March 2019 again, but since then, it has been increasing.

To conclude, I do think the next rally is going to be a lot stronger than the previous. One can call it a bubble, but this time the Bitcoin price range could very well be between $60,000 to $100,000.