In the past week, the cryptocurrency market has seen a marked turnaround. Both in sentiment and in pricing. In past weeks, we have witnessed roughly $25 billion USD enter the markets, causing BTC to break through multiple perceived pricing barriers.
Why is this bounce happening? Is the turnaround here to stay, or simply a red herring? Below we briefly discuss a few potential reasons for this recent activity.
While Bitcoin will be undergoing its own ‘halvening’ in 2020, the time is now for Litecoin. The silver to Bitcoin’s gold, is due to see its mining rewards cut in half later this year, sometime in August. These events are often met with positive sentiment, and will see their respective coins jump in price in the months leading up to it.
In this total market turnaround, LTC was the one to lead the charge. There were multiple days where LTC was rising first, while the rest of the market followed. Did the positive sentiment towards LTC rub off on the rest of the market? Possibly.
One event that has slid under the radar of many is the launch of BTC and ETH indices by NASDAQ. This launch is scheduled to take place on February 25th. This event is important because it will allow for the creation of a defacto pricing mechanism for some of the industry’s biggest coins/tokens.
For those interested in the price of Bitcoin, many different values can be found at any given time, depending on the resources used. The NASDAQ indices provide a price point generated through a bevy of data, garnered from various sources. This simple service, provided by a trusted entity such as NASDAQ, is key for the eventual entrance of institutional investors into the space.
The announcement that JPMorgan created its own
stablecoin/cryptocurrency was met with an overall negative sentiment this past
While many pointed to the positive development that a big bank would get into the space, the reality is that their JPMCoin doesn’t really resemble a cryptocurrency. The decision to launch it also demonstrates the manipulative nature of big banks, as they have jumped on board after bashing the industry in the past.
With the industry currently comprised of die-hard traders, and those seasoned through bull and bear markets, it is hard to believe that the launch of this coin is responsible for the market turnaround.
Positive U.S/China Trade
Some have noted that positive talks surrounding trade agreements between the U.S and China has led to the positive sentiment. This very well may be the case, even if it shouldn’t be. Due to the young age of the industry, it is affected by both positive and negative news to a great degree than older, more established sectors.
With recent weeks seeing a BTC price stable in the mid-3000 USDs, it has given traders time to come to terms with the market. No longer is it blatantly obvious that the market is heading downwards. Each day of stability raises chances of a bounce back up.
This stability, combined with the fact that the current pricing deficit vs peak matches past market downturns, has given traders hope that the bulls are soon to return. While there are always going to be bears that believe a further drop is possible, they are beginning to appear out-numbered, and traders see a greater potential for upside at current prices.
Somewhere in Between
The truth is, the market turnaround is probably a combination of all of these events – there is no one cause. As these positive events begin to compile, it will begin to get harder and harder for the bears to restrain the bulls.