Tag: institutional investors

Cryptocurrency prices soar in the first week of May; Will Seasonality influence Bitcoin’s prices again?

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Bitcoin and Ethereum, the leading cryptocurrencies had a strong finish at the end of April by marking their respective all-time high prices. The start of 2017 has been staggering for Bitcoin as negative fundamentals have hampered its price growth consistently in phases. Just when the currency was set for a Bull Run, one or the other problem would impact the prices turning the market bullish on a short term scale. Ethereum on the other hand has had a smooth run and gained good momentum during the scalability debate of Bitcoin. Investors proactively transferred their investments from Bitcoin to Ethereum to shield themselves from the price fluctuations during this phase boosting Ethereum’s prices. As we enter the 5th month of the year, the prices of the cryptocurrencies are going up and we believe seasonality is playing a strong role in this. Let’s dive deep into the internal dynamics of each of the cryptocurrency and what is in store for them:

Bitcoin went through threatening times:

Bitcoin had to overcome hurdles that could have ended the digital currency’s existence if the community didn’t reach consensus. The Blocksize debate or the scalability debate brought bearish clouds to the crytpocurrency’s price domain making it extremely difficult for the prices to recover in a quick time. The issue came as an insult to injury post Winklevoss ETF rejection and Chinese exchanges ban on withdrawals. Nevertheless Bitcoin has recovered in a fine fashion to break the all-time highs and register a new high for the cryptocurrency. With the scalability debate now resolved, Bitcoin is looking stronger than ever while trading around all-time highs. What remains to be seen is whether the trend will receive an unexpected boost due to seasonality or just continue to grow/dull down without any influence.

Ethereum sees unexpected boost:

Ethereum has been the cryptocurrency that tackled scalability issues in its formative stages to bounce back strongly into cryptocurrency sphere. Owing to its executable smart contracts on blockchain  and applications in various verticals Ethereum has found solid ground to grow without inhibitions. With Bitcoin’s scalability issue surfacing, Ethereum’s prices have sky rocketed to over $40 in the past month. With the talks of a possible Ethereum ETF, the prices further pushed higher making an all time high of $80.

Will the Seasonality Kick in?

We have observed that especially for Bitcoin, the markets have followed a good deal of seasonality with the prices going higher towards the end of the semester. This half yearly pattern may reflect a periodic activity on the part of institutional investors or swift moving of funds from one asset to other in sync with their seasonal cycles. Whatever it may be, the seasonality is a pattern that has been holding for the cryptocurrencies and we can surely expect a sudden spike owing to these factors in the near future.

Global markets tank, Bitcoin’s uncertainty lets Gold regain its stature as ‘Safe Haven’

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The global markets slumped on January 12, 2017 after a news conference by President-elect Donald Trump. Assets declined across the globe with European, Asian shares and S&P 500 futures all falling, while the dollar slumped against most currencies. The conference disappointed the institutional investors with reveals to very little details as to economic and trade plans. This element of uncertainty resulted in a major slump in US dollar trading after recovering from a three week low. Surprisingly even after so much market commotion, the Bitcoin price remained unaffected despite so much market activity. Let’s look into why Gold reigned while Bitcoin was left behind during the latest market collapse:

Bitcoin stagnant as uncertainty looms:

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The year had a lot of surprises that came as backlash for Bitcoin’s Bull Run which neared the all-time high start of this year. Firstly when the prices approached all time high, panic associated to Chinese policies led to the first stage of the collapse. After briefly trading at $900 range for quite some time the next collapse occurred a couple of days later. This was majorly due to the news that Peoples Bank of China has acted on Bitcoin regulation in 2017. They have contacted exchanges to monitor the process in order to avoid currency getting out of the country.

Following the second crash, Bitcoin has formed some kind of support around $750 and has been trading in the area ever since. It remained unaffected during the Yuan’s fall and the global market’s pandemonium since the investors are looking at it cautiously now. After trading sufficient volume and building a strong support, it might finally take off and adhere to the conventionally observed fundamentals.

Gold returns as the only ‘Safe Haven’:

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Gold spiked up to over $1,200 after Wednesday’s shift in market dynamics. The price jump for a mere market scare can be attributed to Bitcoins unavailability during this time. The fact that Bitcoin rallied upto the high but wasn’t able to breach it significantly has left an element of doubt in the minds of institutional investors. Hence the general inflow of funds has been redirected to Gold, retaining its status as  reliable asset. Whether Bitcoin would be able to displace Gold again as a security asset or Gold will continue to dominate this sector, only time will tell.

 

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