Bitcoin Price Stabilizes Following Brush With 2018 Low as Search for Bottom Continues
Bitcoin is back to trading above $6,100 after the cryptocurrency set a new bear-market low for 2018, triggering a partial relief rally Sunday afternoon. However, the search for an elusive bottom will likely continue as the breakdown of technical positions keep retail investors on the sidelines.
BTC/USD Price Levels
Bitcoin broke below $5,800 on Sunday, marking the lowest point of the year for the largest cryptocurrency by market cap. Depending on who you ask, BTC/USD values bottomed around $5,787 on major exchanges, surpassing the Feb. 6 swing low by around $60. The new low marked a nearly 71% reversal from the December high of almost $20,000.
The new low triggered an oversold signal on the Relative Strength Index (RSI), which later helped BTC values recover above $6,100. At the time of writing, BTC/USD was valued at $6,153.45.
Bitcoin has held above $6,100 for more than ten hours, with daily trade volumes hovering around $4.9 billion.
The broader cryptocurrency market has been dragged along for the ride, with total assets in circulation reaching a low of around $235 billion. Altcoins have shouldered heavier losses and now account for just 58% of the total market. Bitcoin represents the other 42%.
Interest in Bitcoin Grows for the First Time Since March
Google searches for the word “bitcoin” increased this month for the first time since early March, ending 12 consecutive weeks of stagnant or declining interest for the biggest cryptocurrency by market cap.
Google gave “bitcoin” a trending score of 12 in the week ended June 16, up four points from the previous week and the highest reading since Apr. 28. Bitcoin’s trend value declined by three points to 9 in the week ended June 23.
Trend scores gauge interest in a particular keyword using a scale of 1-100 where higher readings are associated with greater search activity. Bitcoin received a perfect score of 100 before Christmas, which was around the time that prices peaked above $19,500.
Google search activity is seen as a barometer of first-time buyer interest in the cryptocurrency market. As the chart above demonstrates, organic searches for “bitcoin” were highest during the height of the bull market as more people became interested in cryptocurrency.
Chris Burniske, formerly of ARK Invest, made the connection between Google search trends and bitcoin prices as far back as last summer when the market for cryptocurrencies was just heating up. The relationship between internet search activity and bitcoin prices was jokingly referred to as “a virtuous Satoshi cycle.”
Bitcoin’s bearish reversal has given rise to the complete opposite of the virtuous cycle highlighted by Burniske. As a matter of fact, declining interest among first-timers is believed to be a major contributing factor of the half-year correction in the market.
According to Nick Colas, a prominent crypto analyst for Wall Street, it may take several years before bitcoin returns to record territory. In his view, the key driver (which bitcoin lacks) is new adopters.
“Like any new technology, you need new adopters to come in to make it more valuable.” Colas said told CNBC in a March interview. “Then, we have a solid trek higher. Then, interest will reengage.”
Exchanges like Coinbase have expanded service offerings that cater to institutional traders partly in anticipation of further depreciation in retail interest. Last month, Coinbase launched a suite of products geared toward unlocking up to $10 billion in institutional capital the firm says is currently sitting on the sidelines.
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.