Bitcoin Goes Ballistic After Breaking Through $8,000 Level
The U.S.-Iran conflict and something called the “January effect ” — where professional investors return to work after the Christmas break — are both credited with contributing to a rally in Bitcoin.
Bitcoin on Jan. 7 climbed to the highest since November after breaking through the $8,000 price level, rising as much as 7.3 percent to $8,128 in New York trading, Bloomberg reported.
Then it fell below $8,000 overnight on Jan. 8, ending a brief period of bullish action. Bitcoin started gaining last week as the Iran crisis unfolded, despite mixed opinions over whether geopolitical events were influencing the cryptocurrency or not, Cointelegraph reported.
Over the last year, bitcoin’s price has jumped 92 percent.
“But for the most part, individual gambles are still pretty dicey for the typical investor,” Matthew De Silva wrote for Quartz. “Pegging your livelihood on the prospects of one company, or a cryptocurrency, could soon leave you out in the cold.”
Bitcoin’s break above its previous resistance to the $8,000 mark may not be as bullish as many believe. “In spite of the overt bullishness of its recent price action, it does appear to be struggling to gain a solid footing above this level,” Cole Petersen wrote for News BTC.
Bloomberg Intelligence strategist Mike McGlone said he expects Bitcoin to draw support this year because of its fixed supply and greater adoption.
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“Volatility should continue to decline, as we expect $6,000 to mark this year’s key support and $10,000 to hold resistance,” McGlone wrote in a note Tuesday.
Getting a grip on the bitcoin market “is damn near impossible,” according to De Silva. It doesn’t obey the same rules as the stock market. Price is driven by demand only, not revenue. This should simplify things. You don’t have to watch for earnings reports or sales targets. But it doesn’t, because the bitcoin market is convoluted.
There are 18.1 million bitcoins in circulation.
“You can look at adoption (e.g., retailers who accept bitcoin) but fake news, amplified by crypto fanatics, often gets in the way,” De Silva wrote. “There are too many factors working in opposite directions to make a meaningful guess at bitcoin’s future. And for would-be investors, that’s pretty scary.”