During 2017, it increased twenty-fold – December’s $ 20,000 for a virtual coin – and then fell sharply by more than fifty percent in less than two months. This is exactly the picture that many Kryptonians remember when watching the current rally, during which the price of the most widespread digital currency has risen by more than half in the last month.
Currently, according to some short-term indicators, the price of bitcoin is considerably overburned. For example popular index of Fear & Greed, which takes into account not only price movements but also the sentiment of speculators on social networks, has been in the zone of “extreme greed” around ninety points out of a hundred possible in recent days. From a structural, and therefore long-term, point of view, however, the current situation cannot be compared to that three years ago, experts say.
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So far, the price has risen steadily, and we are witnessing very little involvement of retail investors. At the same time, markets are much more accessible to large institutional investors. However, it is definitely not possible to talk about a safe investment, digital currencies are still very risky, “he told the agency Reuters Larry Cermak from the analytical company The Block.
“Now the price is not raised by speculators, but by institutional investors from the United States, who perceive bitcoin as digital gold or Ethereum as a development platform,” says Rockaway Blockchain investment partner Viktor Fischer. Those who perceive the cryptocurrency as an analogy to gold usually take it as insurance against the threat of inflation, and therefore plan to keep digital coins for a long time.
#Bitcoin: All-Time Highs in Sight, This Time Without the Hype. Public interest, as measured by mentions of bitcoin in media articles, is at a low despite rally. Another big bull run could have far further to run if/when public reaches euphoric #FOMO stage. https://t.co/dB3YAkhucT pic.twitter.com/PcDWYIyT4Z
– Holger Zschaepitz (@Schuldensuehner) November 19, 2020
The words of Cermak and Fischer are also confirmed by the development of the number of mentions of bitcoin in the media. This year, it is on completely different values than when in 2017, at the peak of cryptocurrency, it reported on bitcoin and the media, which usually avoid technological or financial topics.
In addition, the bitcoin network is not as crowded this year as it was in December 2017, when the great interest of speculators “clogged” transaction channels for a short time, thus driving away the fees for bitcoin transfer even above $ 10. Currently, the virtual currency can be sent at a cost in the order of units of crowns.
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However, the Coindesk server came up with a completely different interpretation of price events at the crypt market. He mentions the situation of Chinese cryptocurrency miners, who suddenly lost the opportunity to sell mined digital coins due to government raids on local exchange offices, which could have caused a sudden drop in the supply of bitcoins on the market.
However, no one can estimate whether and when the miners will be able to regain the extracted bitcoins for standard currency. This is one of the reasons why the world of cryptocurrencies is very unstable. Therefore, many analysts and investors are rather skeptical about cryptocurrencies, the CTK agency wrote.
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