After a tumultuous seven days sell-off which saw the price of bitcoin drop to as low as $5, 957 – the first in twelve weeks – analysts have predicted that the cryptocurrency could go on a bull run of as high as $50,000 by December.
This rebound will be driven, they say, by increasing regulatory recognition of cryptocurrency exchanges, the entrance of institutional capital and major technology developments.
One of the analysts, Thomas Glucksman, head of APAC business development, Gatecoin told CNBC that, “One possible appetiser for the bulls, or the catalyst for the recovery, will be the release of another cryptocurrency backed instrument listed on a major exchange. There are several candidates in the pipeline, it is only a matter of time until we have a cryptocurrency backed ETF (exchange-traded fund).”
The value of bitcoin has been declining since December when it hit an all-time high of $20,000. Cryptocurrencies are susceptible to change and even somewhat chaotic, which causes anxiety among investors.
Financial regulatory agencies have been on a particular look out for cryptocurrencies activities since the beginning of 2018. From China, to India, Japan, and all the way to the US and UK central banks have sought to tighten – in some cases ‘eliminate’ – the operations of cryptocurrency exchanges. The authorities in India went as far as disclosing intentions to put an end to all activities involving cryptocurrencies and exchanges that make it available.
On Tuesday evening, the US Senate Banking, Housing and Urban Affairs Committee held a hearing about the risk of cryptocurrencies. A major worry for investors has been the rumours that Tether was being used to manipulate the US dollar in order to drive the price of bitcoin upwards.
In spite of the regulatory jitters, the price of bitcoin saw some recovery on Tuesday and Wednesday morning adding nearly $2,000 in twenty-four hours and representing an increase of 22 percent. As at time of writing, the Coindesk Bitcoin Price Index (BPI) showed the average price across global exchanges at $8,245.33.
The sharp price increase, according to commentaries from analysts on various social media platform, is a result of the US Securities and Exchange Commission’s (SEC) and the Commodity Futures Trading Commission’s (CFTC) cautiously optimistic tone set at a Senate hearing on Tuesday.
Many investors appear to have taken solace from the fact that members of Congress and the SEC see potential in blockchain technology.
Jamie Burke, CEO at Outlier Ventures said: “We believe after February, the market will likely go on a bull run comparatively if not greater than last year, potentially reaching the trillion-dollar mark before a proper crypto winter sets in where the market becomes more focused on proper market fundamentals.”