Bitcoin’s Fundamentals Remain Strong As Markets Stagnate
Bitcoin markets have been relatively calm this month, experiencing modest price fluctuations as the digital currency trades within a reasonably tight range.
The cryptocurrency has spent most of the month trading between $10,000 and $11,000, after reaching an intra-month low of $9,552.15 on September 1, CoinDesk data shows.
In spite of this relative malaise, bitcoin has strong fundamentals, and major companies have been showing significant interest in adopting digital currencies and distributed ledger technologies.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Bitcoin’s hashrate, a measure of the bitcoin network’s processing power, has been climbing steadily over the last several months, managing to set fresh, all-time highs, according to BitInfoCharts data.
Further, bitcoin’s estimated transaction volume recently reached its highest since mid-July, according to blockchain.com.
Facebook, J.P. Morgan and Walmart have all been making forays into digital currencies and blockchain technology, helping illustrate the robust interest in these potential disruptors.
John Todaro, director of digital currency research for TradeBlock, spoke to these developments.
“Bitcoin continues to see strong fundamentals, including high network security (mining hashrate reached an all time high), considerable usage as evidenced by the growth in transactional volumes, and recent growth in corporate interest around bitcoin and blockchain payments,” he stated.
Todaro also offered a bullish outlook on the digital currency’s future prospects.
“More firms are increasing on-ramps for institutional investors to gain exposure to the space,” said Todaro.
“In the next few weeks, Bakkt is set to launch, allowing investors and traders to trade physically settled bitcoin futures contracts for the first time.”
Bitcoin’s Consolidation Phase
However, bitcoin must first exit its current consolidation phase before it enjoys compelling gains, emphasized Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital.
The digital currency has been trading in this manner since experiencing a sharp rally earlier this year, he noted.
“Only after the consolidation phase is complete and new catalysts drive the market forward will we see retail interest, fresh capital flows and higher valuations,” DiPasquale concluded.
However, he emphasized that the digital currency may be trading at a discount right now.
“Bitcoin’s fundamentals remain strong and the current price is not reflecting them, which bodes well for future valuations in my opinion.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin and ether.