Bitcoin is currently trading near $7,600 after the cryptocurrency failed to push past the $8,000 mark during the past week. Once again, the media is buzzing with terms like “ bubble”, saying that the latest price corrections might be a sign that the cryptocurrency’s “bubble” cycle is finally coming to an end.
Namely, as reported by Market Watch, Bitcoin might currently be at the fourth “bubble” stage according to the financial theories of the late economist Hyman Minsky. As theorized by Minsky, every financial bubble progresses through five stages. The first stage is “displacement” and it is followed by a “boom”, “euphoria”, and then “profit-taking” and “panic”.
An adviser at San Francisco’s FRB (Federal Reserve Bank), Joost van der Burgt, has used this theory on Bitcoin and estimated that if the cryptocurrency is in a bubble, it is currently at its “profit-taking” stake. This, according to the theory, means that “panic” might be just around the corner, which would result in a substantial price crash. However, even van der Burgt says that Bitcoin might not be a “bubble” at all and could be “different than anything we have seen before”.
Market Turns Bullish; Volume Stays Low
The price of Bitcoin stayed within the same range from a week ago when the cryptocurrency traded close to $7,500. Although it seemed that the buying pressure would continue to drive the price over $8,000, the closest Bitcoin climbed to that range was $7,752.20 – a price point that was hit on Sunday morning. But shortly after this peak, Bitcoin managed to slide back down again to its lowest point of $7,402.06 on Tuesday.
Looking at the market numbers, one can’t help but notice that the 24-volume remained relatively low, especially when you compare it to the numbers from a few months back. Namely, during the past 7 days, the trading volume remained mostly near the $5 billion mark, never climbing to a significantly higher level than this threshold. The same trend can be observed today when Bitcoin’s volume is at $4.7 billion while the market cap sits at $130 billion.
Our technical analysis shows that the market is in an overall buying mood, with 6 out of 12 oscillators being in the green zone and 8 out of 12 moving averages also sending a buying signal. The price movements are forming an inverse H&S (head and shoulders) pattern, so Bitcoin could be up for a climb over $7,800. However, if the bullish pressure doesn’t hold, we could be looking at further consolidation or even a drop down below $7,500.
Bitcoin to Reportedly Reach $12,500 This Year
In other interesting news, Trefis Team – contributors at Forbes magazine – predict a new year-end price point for Bitcoin of $12,500. According to the contributors, the lower prediction (Forbes originally predicted a price point of $15,000) is owed to the lower transaction volumes that we’ve all recently observed across cryptocurrency exchanges.
The analysts note the halving of trading volume in the period between March and May 2018 when the volume dropped from $914 million to only $429 million. However, according to Trefis Team, demand is expected to grow in the upcoming months, although with a slower growth rate, and so are the numbers of unique users.
And as the trading volume increases, Bitcoin’s price is expected to grow and settle near $12,500 by the end of the year. The main factor that will reportedly contribute to a volume increase and subsequently Bitcoin’s price is support from the traditional financial sector, which has been warming up to cryptocurrencies in the past months.