Bitcoin: Up or Down? Best and Worst Case Scenarios for The Cryptocurrency Price Pump
As the Bitcoin and the altcoin market continue to pump like crazy, we appear to be on the precipice of something huge.
Whether that’s a huge pump to an new all-time high, or a huge dump back down to whence we came is unclear. Fundamental analyses are no use at this point. Technical analysis got caught with its pants down in the past week, and is now being re-calibrated to the these new market conditions.
Amid the Bitfinex/Tether uncertainty and the Binance hack, the very thing that wasn’t supposed to happen…has happened. So let’s speculate further.
Ethereum Does the $200 Dance for a While
From September to November of 2018, the value of Ethereum found itself bound within a very tight range. For almost three months the price of ETH fluctuated from a baseline of $200.
Those fluctuations went as high $270; and as low as $170 – but each time ETH returned to the $200 mark. Despite this occurring during one of the most stable periods of the year for Bitcoin and co, it may well have been one of the most profitable times of the year for Ethereum traders.
Watching the value of ether flirt with that $200 range brings back memories of a simpler time. Unfortunately, whether or not it stays there right now is probably more dependant on outside factors.
Those factors? Oh, you know, just little things like whether or not Bitfinex implodes and Tether crumbles, sending the price of Bitcoin to below 1k.
Bitfinex and Tether Take a Dirt Nap – Bitcoin Plummets
So Bitfinex raises another $1 billion just in time to save Bitcoin and the crypto market. That’s nice and all, but let’s not forget the reason they needed the $1 billion in the first place.
The business practices of those running Tether are no secret at this point. The reason over $800 million was confiscated by European authorities is because of Tether’s series of one-night-stands with various banks.
See, in the past few years Tether has jumped from bank to bank – opening an account for just long enough to conduct some business before inevitably being shut down. This appears to have been the job of Crypto Capital – the firm handling Tether’s money in Europe.
This exchange between a Bitfinex executive codenamed ‘Merlin’, and a representative of Crypto Capital shows the precarious nature of the crypto market in relation to USDT.
Taken from a (roughly) scanned court document from 2018, the exchange shows the Bitfinex executive begging for funds from Crypto Capital, or else:
“BTC could tank to below 1k if we don’t act quickly.”
Fast forward just over a year and Bitfinex now have their money. So… everything’s ok now, right? Right!?!
To the Moon!
History suggests the current pump will come to a crashing halt at some point. But then, history doesn’t always repeat itself. In fact, Bitcoin’s short history so far has been a series of surprises and unexpected events.
More than one analyst has proposed a high of $10,000 before any pullback occurs. That would amount to half of the previous all-time high. When 10k hit back in December of 2017, it took just over two weeks for 20k to follow (with dips in between).
Conversely, if 10k was to fall away, then one has to imagine the drop would be huge. The 1k prediction by Merlin might be too much, but it’s easy to see BTC reverting to the $5,000 range it previously occupied mere days ago.
This has to be the most reasonable, logical bet at this point. But then, reason and logic don’t count for much under these conditions.
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.
Featured image courtesy of Shutterstock.