Cryptos Rally: What Does the Future Hold?

After Bitcoin has broken the critical $11,000 barrier, many crypto enthusiasts are asking about what this means for the future of the crypto market. Remember, Bitcoin collapsed to the $3,100 lows last December but the recent climb above the critical $11,000 mark was considered (by many) as highly unlikely (up until just a few weeks ago).

By market cap, Bitcoin is the world’s largest digital currency and its recovery from its prior lows has been nothing short of astonishing. Bitcoin recovered more than half of its historic rally (which was reached during the crypto frenzy peak). Back then, Bitcoin nearly hit the $20,000 level before making a sizable crash of nearly 75%.

Rallies in Bitcoin also fueled substantial price gains in Asian stocks related to the cryptocurrency sector. Ultimately, this shows the crypto’s resilience despite growing skepticism and Bitcoin’s increased acceptance at established companies (i.e. Facebook, Fidelity, and Amazon).

Crypto Bulls Have Been Waiting

The crypto market’s ability to bounce back has been nothing short of extraordinary. The virtual currency recently broke through the critical $10,000 mark, and this was the first time that the king crypto achieved this price zone in 15 months. In reality, we can see that markets have not left the asset behind. Rather, crypto bulls have waited on the sidelines in order to find the best moment to return to cryptos. Actually, there are some ultra bulls and crypto investors that are hoping Bitcoin will reach $50,000.

These high expectations are due in large part to renewed interest from mainstream participant in the world of cryptocurrencies and blockchain technology. Distributed ledger technology forms the basis of Bitcoins security features and Facebook’s Libra will likely build on these security features in the future. To date, this is likely the highest profile project in the crypto world and social media partners are actively getting behind the project. Companies like Visa and Uber have actually been tapped to help build the financial system.

Crypto Stocks in Asia Find Momentum

The latest crypto rally also helped push related stocks higher. In Asia, this has been particularly true. A few examples include GMO Internet, Metaphs, Remixpoint, and Ceres which have all seen their stock prices move higher. Woori Technology Investment and Vidente are also examples of companies listed in South Korea that have been helped by these trends.

Gains in crypto stocks in Asia have been helped greatly by Bitcoin’s resurgence. Stock shares with exposure to cryptos have risen in the past when Bitcoin makes a bull run. This is especially true for companies that avoid crypto volatility but have exposure into crypto markets. The increases in share prices at crypto companies tend to rise more than the benefit they receive during a surge in crypto prices. This trend activity often results in fast market corrections.

Additionally, investors should do their research before investing in cryptocurrency companies in spite of the fact that they have lower risks. Certain strategies can go wrong in the event that crypto markets crash once again. Of course, this has happened in the past without much warning but even though Bitcoin has moved below $11,000, current values are still above support levels at $10,000.

Bitcoin Rebounds in 2019

Bitcoin’s rebound this year has matched that of many other cryptocurrencies. Ultimately, the strength of this rebound will be tested by figures like Treasury Secretary Steve Mnuchin as the possibility of new regulatory standards have the potential to bring cryptocurrency into the limelight once again. This could also help prevent illicit activity from rogue nations, terrorists, and criminals so crypto enthusiasts can avoid rules which might hobble this new and emerging financial industry.

Moving Forward in Crypto

Even with the rising demand for cryptos and emerging evidence that the crypto winter has ended, several factors that headwinds might threaten to push cryptos (and Bitcoin) below their prior support levels. This could result in a downfall in the case of anyone with substantial exposure to the crypto industry. Position risks in the world digital crypto coins would then be headed for continued volatility (which is something that we saw in May). As a result, crypto traders should exercise caution after seeing extreme rallies.

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