Bitcoin- How Far Can the Bull Rally Go? Are We in Danger of a Retracement?
Bitcoin has risen almost 300% in 2019 YTD, and the coin touched $12,000 this week. As the king of cryptocurrency approaches 70% market capitalization dominance and volatility increases, investors and traders alike are asking how long this trend can continue. Will Bitcoin continue to increase in price, or will we enter a bearish downtrend in the short-term?
Bitcoin’s rally has likely been due to institutional investment, media and governmental scrutiny, global stock market decreases and increasing volatility momentum. Bitcoin has risen approximately 40% in Q3 2019, which is a substantial gain that may lead to a retracement. Last quarter’s rise gave way to a 20% fall due to traders using leverage to amplify their gains. Leveraged trades require traders to sell or face margin calls that can lead to account liquidation.
Institutional investment and the futures markets have propelled the 2019 bull market. Due to institutional attention and investment from large investment houses including Fidelity, cryptocurrency prices have increased. Bitcoin’s dominance has risen to almost 70%, which has pushed down the altcoin market. There are plenty of altcoin bargains, and these may become even more evident as money flows from other cryptocurrencies to Bitcoin. Analysts predict Bitcoin may hit 80% dominance before altcoin season begins.
Will Bitcoin continue to perform? As global stock markets fall due to the US and China trade war, investors are increasingly focusing on safe-haven assets including gold and Bitcoin. Gold has performed very well due to instability as has Bitcoin. I see a small short-term retracement as traders crystalize their profits, and then a ride up to $14,000. The resistance level for Bitcoin is currently at $12,500 and there is a lower resistance level of $10,500 that could lead to a substantial retracement.
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Picture from Pixabay.