It's been a wild ride lately for bitcoin, even by its own volatile standards.
Bitcoin prices escalated past $5,000 for a 22% gain in one hour on Tuesday before dipping to around $4,800, which still represents a height not seen since November. The move follows a month of apprehensive dips and net-gain recoveries for the original cryptocurrency.
Bitcoin took a legendary freefall last year after topping $18,800 per coin. It lost around 82% of its value, dipping below $3,200 in a bigger crash than the dot com era. This prompted some investors to abandon bitcoin for more tangible commodities, but some have remained faithful through the bearish season.
The End of the Bear Market?
According to experts, bitcoin's trough could be over. "New token sales on exchanges --colloquially called IEOs for Initial Exchange Offerings -- have reinvigorated speculative demand for bitcoin and a few other digital assets, as they are used as currencies to buy into the new token sales," said Eric Lamison-White, the founder and CEO of the Pareto Network, a research platform for investors.
But he cautioned that "bitcoin is at a resistance level which has been met with heavy selling the last few times the price has hit this range over the last few months" and noted that "to affirm a bullish position, look for the price to improve above $4,200 on heavy volume. Otherwise, look for the bear trend to continue."
Ian Balina, the founder of investment advisory firm, 100x Advisors, was an early adopter and has followed, written, and spoken about bitcoin for years. Balina sees it trending more aggressively upward toward the end of the year. "I believe bitcoin has bottomed and the price will be going sideways for most of the year until end of Q3 and Q4 when prices will start going up a lot as larger corporations start endorsing cryptocurrencies," said Balina, who said he's overall "very bullish" on bitcoin in 2019.
Public Adoption of Crypto Will Determine Its Viability
Balina and investors like him are looking to larger companies to cement crypto's long term viability. And there are indications that the public, and the larger markets serving them, are ready for a bigger shift to crypto.
January's Consumer Electronics Show showcased several new consumer-ready blockchain and crypto technologies. Hardware wallets are increasingly popular, and more retailers are exploring the possibility of accepting crypto payments. Meanwhile, the decentralized structure of blockchain, the technology behind bitcoin and other cryptocurrencies, is increasingly enticing as a technology that could replace cloud storage, or even the internet altogether.
Bitcoin Still Sets the Pace for Crypto Market Overall
As the most public avatar of cryptocurrency, bitcoin sets the pace for its competitors, many of whom have followed similar if less dramatic trajectories. Ethereum (ETH) and Litecoin (LTC) even experienced almost identical spikes yesterday between 5:00 and 5:45pm, at the same time as bitcoin.
Litecoin (LTC) has seen 24.47% gains in the past month, while Ethereum (ETH) is up 5.66%. Bitcoin Cash gained 28.14% last month, while the original Bitcoin is up 8.70%. Bitcoin still holds the largest market cap by far, currently at $73.3 billion.
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The author holds stock in investment holding company, Leucadia, and is a partner in an emerging technology advisory firm, Notability Partners. He holds no positions in cryptocurrencies nor in any companies that invest in them.