The much-awaited cryptocurrency rally might come earlier than anticipated, as several factors may push cryptocurrency prices higher before 2018 ends.
The cryptocurrency market has a value of $211 billion as of this writing. While there a few more months remaining in the year, financial experts still theorized that the market capitalization of the crypto world would get even higher.
No one has a crystal ball that can predict the future. However, you do not need to be a fortune teller to see how resilient and practical the cryptocurrency market is. Influencers, as well as market veterans and industry leaders, give out four main reasons why cryptocurrencies may go on a bull run before 2018 ends.
The derivative market accepts Bitcoin
The derivative market has a vital role in the financial world for a country. Options for stocks, bonds, commodities, and other investment vehicles exchange hands every trading day. The impact of this financial sector is enormous: the derivative market for the United States alone is valued at $11 trillion.
Becoming part of the derivative markets gives legitimacy to a financial instrument. Just in the last quarter of 2017, Bitcoin became part of the mainstream business world. Two of the biggest marketplaces for derivatives, the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME), allowed the trading of contracts for the asset.
Bitcoin will celebrate its first anniversary of becoming a so-called mainstream investment vehicle on Dec. 10, when the first Bitcoin contract was traded through the CBOE. With Bitcoin remaining in the market, the more conservative investors may be interested in investing in alternative investments.
Investing public notices self-directed Bitcoin IRAs
With more open-minded millennials advancing with their careers and having higher disposable incomes, the investing world will see the resurgence of interest on Bitcoin and other alternative investments. The IRS, through IRS Notice 2014-21, already gave its sign of approval where cryptocurrencies are categorized as property, like stocks and bonds, and can be part of an IRA’s portfolio, provided that it is a self-directed one.
The rise of a Bitcoin IRA has made the cryptocurrency more recognizable among the investing public. With more people looking for ways to park their retirement egg, Bitcoin and even other cryptocurrencies can see an increase in demand. Since most cryptocurrencies have a set limit of available coins to the public, the lower supply may mean a higher price.
Corporate demand for blockchain technology emerges
A lot of markets and corporate disruptions happened in 2018. For instance, Lithuania invited BABB, a cryptocurrency that offers mobile financial services, to apply for a banking license in its jurisdiction. Other companies also accept Bitcoin and a few other cryptocurrencies as a mode of payment. CheapAir.com accepts Bitcoin through BitPay services. Both startups and blue-chip companies look for blockchain engineers, with around 14 job listings for every blockchain developer.
The increasing demand for anything related blockchain or cryptocurrency shows the growing value of these disruptive forces. This surge of demand can be seen in search of corporations and banks for experts in cryptocurrencies and blockchain technology applications.
Technical support strengthens cryptocurrency prices
Looking at the price chart for Bitcoin can give you a few interesting observations. A year ago, October 17, 2017, the Bitcoin price was at $5,736. On October 17, 2018, the price is at $6,579. The price of one Bitcoin has remained resilient, with $5,900 being the strong support where bullish traders and investors pulled up the price.
Other cryptocurrencies experience the same pattern. Ethereum and Ripple also show signs of a stable price, with volatility going lower. Last year, the big bull market where cryptocurrencies enjoy two to even three-digit daily gains first experience months of low volatility.
Historically speaking, the cryptocurrency markets usually follows the patterns of Bitcoin. When Bitcoin rallies, the alternative currencies follow. Experts predict that Bitcoin will continue to trade in a price range between $6,000 and $8,000.
Interestingly, February 2018 had Bitcoin dropping to $6,000 but soon rebounded. Two months after, Bitcoin price went down to $6,000 support levels and rebounded back. While historical data is not a surefire way of telling what the future holds, patterns and trends still dominate the thinking of traders and investors. Barring a black swan event or any other significant moves, Bitcoin will most likely face a trading range before rallying up, like what happened historically.
When Bitcoin moves, other cryptocurrencies follow as well.
Another food for thought: Sellers prefer not to liquidate at low levels, since profits or even capital may be at risk. Also known as seller fatigue, this behavior may also lead to the predicted rally before the end of 2018.
With these four main reasons, investors may be enjoying the holidays better. While there are no humanly possible ways to know the future accurately, people can still logically deduce that blockchain and cryptocurrency are here to stay and grow.