Bitcoin Hits New High. Why This Isn’t 2017 All Over Again

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Bitcoin Hits New High. Why This Isn’t 2017 All Over Again.

By Avi Salzman

The price of Bitcoin rose as high as $63,209 before giving back some of those gains, according to Coindesk. It was more recently trading at $62,892, up 4.4% in the past 24 hours.

“I think obviously this week’s hugely important,” Richard Byworth, CEO of crypto company Diginex (ticker: EQOS), said in an interview on Monday. “On a technical level Bitcoin has been bumping up against that all-time high of about $62,000 for some time. I think this is going to be the catalyst that helps drive the market higher.”

This pattern of Bitcoin hitting new highs ahead of a major event is not new. The cryptocurrency surged to new highs in 2017 ahead of the introduction of Bitcoin futures on established exchanges run by Cboe Global Markets (CBOE) and CME Group (CME). That rise didn’t last long, as Bitcoin began to slide within days and didn’t recover its previous levels for years.

Bitcoin’s inherent volatility and lack of tangible assets mean that pattern could repeat itself.

Coinbase’s public listing, meanwhile, could also disappoint investors, with its sky-high expected valuation above $100 billion. The company will go public through a direct listing and the selling pressure could be fierce, given that existing shareholders are not subject to a lockup preventing them from unloading shares.

But crypto market analysts expect the bull run to continue. For one thing, the Coinbase listing is one of many milestones this year. Similar signs of Bitcoin acceptance and validation seem to happen every day, with Paypal Holdings (PYPL) recently allowing customers to use Bitcoin to make purchases, big banks like Morgan Stanley (MS) giving some customers access to crypto products, and Tesla (TSLA) letting customers buy vehicles with Bitcoin. The Securities and Exchange Commission may even approve a Bitcoin exchange-traded fund this year.

An analysis published earlier this month by cryptocurrency research firm Chainalysis found considerable demand for Bitcoin at a $50,000 price level, though somewhat less demand at $55,000.

While the price could slip from current levels, it’s unlikely to crash if enough buyers consider $50,000 a good entry point, according to Philip Gradwell, the chief economist at Chainalysis. Gradwell found that $88 billion worth of Bitcoin had been purchased at an average price above that level, suggesting there are “very significant resources available should the price fall back to $50k.” It’s clear that “the market has radically changed with the entry of new large investors who have acquired and held at high costs.”

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