The bitcoin boom is back, and Facebook’s announcement that it’s launching its own digital currency, Libra, played a major role in boosting the bitcoin price. It seems that the mere fact that the social media giant is entering the world of cryptocurrencies has added credibility to the sector as a whole, and bitcoin is benefitting.
Bitcoin rose to prominence in late 2017 when the cryptocurrency experienced an enormous rally. The bitcoin price was rising fast, and many traditional finance houses wanted to get in on the action. Since then Goldman Sachs have been offering bitcoin-linked futures to clients to meet the demand for the derivatives, which are offered by the Chicago Board Options Exchange and the Chicago Mercantile Exchange. This year it was also reported that JPMorgan are developing their own cryptocurrency, and when titans of Wall Street enter the sector, it makes the wider marketplace more respectable.
The ups and downs of the bitcoin price
The bitcoin bonanza in the latter half of 2017 was followed by a major fall, and the bitcoin price spent 2018 in the doldrums as its popularity and the surrounding media interest dropped off. However, there has been an aggressive jump in volatility in recent weeks, and bitcoin posted an 18-month high last month.
While bitcoin is a cryptocurrency, when it comes to trading and investing it probably has more in common with a commodity than a currency. The asset has been touted in some circles as an alternative to investing in traditional markets, and now that it’s back in the headlines, the crypto bulls might start to come out of the woodwork again.
One of the reasons bitcoin was launched was to provide an alternative payment method to government-backed currencies, and to offer a truly global currency. It’s easy to see the appeal of an alternative currency when you consider that in the past President Trump has applied pressure to the Federal Reserve in order to get it to drive down the dollar, while ECB chief Mario Draghi has a track record of talking down the euro. The Chinese government also launched a big devaluation scheme in 2015, which sent shocks through the global financial markets. Bitcoin won’t be replacing traditional currencies any time soon, but if we see another round of the so-called ‘currency wars’, the appeal of cryptocurrencies like bitcoin may well increase.
Bitcoin value: what the future holds
According to CoinMap, there are now approximately 14,300 venues accepting bitcoin as legal tender, which is tiny on a global scale, but when compared to 2013, this number has increased by about 700%. It isn’t just hipster coffee shops in trendy parts of London and New York that accept bitcoin either – some mainstream firms like Microsoft now accept the digital currency too. That said, at the moment, its mostly relatively new online firms like Gyft that accept bitcoin. It’s definitely growing in popularity though and if the increase in the number of venues continues, it will become more commonplace and this should be reflected in bitcoin's price.
The bitcoin price has been in an uptrend since February, and while it holds above the $10,000 mark, the bullish move should continue. Support might be found at the 200-day moving average at $5,502.
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