Going by history, Bitcoin is a strong cryptocurrency that has withstood countless tests in its short existence. The virtual coin went as high as $20,000 in December, fell more than 70% to $6,000 early in February and is now trading above $11,000. Many investors are now wondering, with a flutter of hope in their hearts, that the Bitcoin bull markets are back again.
Bitcoin is small when compared with other financial networks in the world. The whole Bitcoin market is worth less than 3% of gold's $7.8 trillion industry, and that is gold alone. As a result of its small size, the Bitcoin market has been really volatile and is easily affected by speculations.
The main driver of the market is the overall sentiment that Bitcoin is a new technology that potentially would be worth millions in the future.
So, it is always wise to have some (or a fraction) of it in case it fulfills this prophecy.
However, not every investor knows much about Bitcoin or are convinced about its survival. Many are also in the market for short-term gains. As a result, they pull out of the market once a huge negative report hits the crypto space or if the price dips significantly.
If the price starts rising, everyone starts getting FOMO (fear of missing out) and begin pumping money into the market.
The market saw a downtown at the beginning of the year but things seemed to have kicked into a higher gear lately.
Is a huge comeback on the horizon?
In the midst of the cacophony predicting doom for Bitcoin on Wall Street, market analyst Tom Lee believes Bitcoin will be worth more than $25,000 in 2018. In addition to this, the overall positive sentiment in the market seems to have returned, igniting hope for a new Bitcoin rally.
What are/could be the catalyst for this bull market?
- A change in governments' attitude towards Bitcoin trading. Wyoming recently passed a pro-crypto bill and the South Korean government, which in the past vowed to crack down on crypto trading, has stated that it would "support" and even "encourage" crypto operations as long as they're "normal" transactions.
- FOMO. According to CNBC's "Fast Money" trader Brian Kelly, people will start catching the FOMO once the price goes above $12,000.
- The Litecoin hard fork. Altcoin Litecoin last Sunday forked, birthing Litecoin Cash. Beneficiaries of the new coin are likely to dump it for Bitcoin.
- Segwit adoption by Coinbase and Bitfinex. Exchanges Coinbase and Bitfinex are set to upgrade their wallets to Segwit. The majority of crypto investors in the United States use Coinbase for their crypto operations and Bitfinex is touted to be the largest exchange in the world. Segwit reduces Bitcoin transaction fees and times. This significant adoption will cause a little drop in transaction fees which could be the incentive that will win some people over.