Bitcoin Price Edges Lower After Strong Week; $7,000 Still in Play
The value of bitcoin edged lower Friday after a prominent crypto bull revised his forecast for the world’s most valuable digital currency. However, the short-term outlook remains favorable thanks to improved sentiment and higher trading volumes.
Bitcoin Price Levels
After making steady gains for most of the week, bitcoin’s price swung lower on Friday, though losses were contained to a few percentage points. BTC/USD bottomed at $6,533.55, according to CoinMarketCap, before recovering above $6,580. At the time of writing, bitcoin was down 1.8% compared to 24 hours earlier.
Total trading volumes crossed the $5 billion mark for the first time in almost two weeks. Total market turnover amounted to $16.3 billion, the highest since June 26.
Bitcoin isn’t the only cryptocurrency to lose momentum at the end of the week. All major coins in the top-ten were in the red, with losses ranging from 3% to 7.4%. Tether (USDT), a stablecoin that purports to trade at par with the dollar, was the only exception. The total cryptocurrency market cap fell to $262.3 billion Friday, down from a high of $277 billion the following day.
Bitcoin: $7,000 Still in Play
Despite the recent slide, bitcoin is on track for a weekly gain of more than 11%. Gains have propelled the bitcoin price above a key technical hurdle that had thwarted most rally attempts over the past few weeks. Prices reached a high above $6,760 on Wednesday in a sign that momentum toward $7,000 was building. That target remains in tact so long as trading volumes continue trekking upward.
Bitcoin hasn’t traded above $7,000 in nearly a month, making this next milestone a critical one for the bulls. Short-term measures of relative strength suggest momentum is still in play.
Interestingly, bitcoin’s modest decline seems to have been correlated with a new price forecast by Tom Lee, the head of research at Fundstrat Global Advisors. In an interview with CNBC, Lee revised his end-of-year target for bitcoin to $20,000 from a previous target of $25,000. Although most news outlets reported this as a downgrade, Lee later clarified his position on the matter in an interview with CNBC’s “Fast Money”.
In that interview, Lee said his $20,000 price target was a reflection of how high bitcoin can go relative to its mining costs. Historically, the cryptocurrency has traded at 2.5 times mining costs. Given that mining costs are set to reach $9,000 later this year from their current levels of around $7,000, fair market value for bitcoin is likely between $20,000 and $22,000.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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