What Current Bitcoin Price Surge Means for Global Market, Altcoins’ Rise
Bitcoin’s price has been rising for nine consecutive days hitting over the $10,000 price tag across the world’s most popular currencies for trading including the USD, EUR and GBP. A pullback is expected soon after Bitcoin hits a 17-month high (especially considering the decision by Koinex, a top Indian crypto exchange, to shutdown its activities and to allow withdraw services until July 15th), the start of an altcoins market run soon seems dicey.
Bitcoin’s value proposition growing
No particular factor has been identified behind Bitcoin’s 43% surge in the past days but several macroeconomic developments could be linked to it. Since Bitcoin is sometimes viewed as a safe-haven asset similar to gold, rising tensions in the Middle East and mounting fears about the world economy top the list. There’s the continuing devaluation of the yuan amidst US-China trade war fears and it’s suggested that the Tether’s supply has been expanding reportedly because of buyers in China using it for OTC transactions.
Within the period, gold prices have risen to the highest levels since 2013 as the US Federal Reserve hinted at lowering interest rates in July to match a slowdown in the US economy. The European Central Bank is looking to cut interest rates too, that means more money flows into the economy for more people to spend of which a fraction could look to invest into stocks and others to hedge their wealth.
It is also worth noting that Bitcoin has risen in value by almost $2,000 in just a week after Facebook revealed plans to launch a cryptocurrency called Libra which could have a far-reaching implications for governments and central banks around the world. The announcement builds on another institutional adoption that could have spurred mainstream awareness: JP Morgan Chase’s testing out its JPM Coin. Then the psychological effect of the upcoming halving and the widespread view on the “factor of 10(000)”.
Shouldn’t altcoins’ season start soon?
Bitcoin’s current dominance level – a metric that shows altcoins’ relation with Bitcoin – suggests the next altcoins run should start if it follows the same pattern as 2017 (65%). However, the bearish state in the past year may have its toll on low cap projects since it drew the crypto market’s attention to the lack of many altcoins’ differentiating traits to justify their existence. Also, an understanding of Bitcoin’s main value proposition being in its security and limited supply as a perfect store of value has grown. Hence, despite that some altcoins provide benefits compared to or better than Bitcoin’s (for example, Litecoin which handles more and faster transactions), it will not be surprising that much will not be seen of altcoins’ rising immediately with the recent crypto surge.
This trend is set to continue as Bitcoin’s mining difficulty has now reached its highest point since inception. An all-time high mining difficulty indicates an upcoming bullish trend in the price action of Bitcoin against the USD. Also, as more people see Bitcoin as the ultimate means to store value against inflation, the more the price will rise considering that its price has to get higher to meet growing demand for its scarcity.
In retrospect, as the rising price depicts a general sense that the top cryptocurrency is gaining strength against major fiat currencies, the Bitcoin market may be chasing to set an all-time high record this year. Until then, only Bitcoin and some altcoins in the top 20 ranking on Coinmarketcap would rise.