Bitcoin Prices Surge Past $770 But Fall Just Short of 2016 High
Bitcoin prices neared $780 during the week through 2nd December, coming within 1% of the 2016 high of $781.31 reached in June.
The digital currency rose to a high of $778.14 amid sustained support. Prices remained above $700 all week and only briefly fell below $725, CoinDesk USD Bitcoin Price Index (BPI) data reveals.
Bitcoin prices have been enjoying sustained support, as they have managed to stay north of $700 for more than two weeks, having surpassed that level on 14th November, BPI figures show.
The market is highly bullish, according to sentiment data provided by leveraged bitcoin trading platform Whaleclub. Between 26th November and 1st December, the market fluctuated between 82% and 89% long, maintaining an average of 85% long during the six-day period.
Petar Zivkovski, Whaleclub’s director of operations, told CoinDesk:
“Most traders are long on bitcoin. We’ve noticed an uptick in shorts in recent days as some contrarians try to pick the top, but those remain relatively rare.”
Zivkovski spoke to continued trader interest, telling CoinDesk that he also believes the price rise is fueled by new bitcoin buyers.
“Price has made a series of higher highs and higher lows, which indicates that there is still enough new money coming in to the system to push price to new levels.”
Analysts indicate that bitcoin prices are further receiving support from a handful of macroeconomic developments that have helped drive market participants to the digital currency.
For example, China recently imposed additional capital controls in an effort to reign in outflows and help reduce the yuan’s continued slide against the US dollar.
As the Asian nation’s efforts to control its currency continue to draw headlines, cryptocurrency fund manager Jacob Eliosoff pointed to data supporting the notion that China is playing a key role in bitcoin trading.
He told CoinDesk:
“One thing the data does show is that the CNY price has led the USD one: currently $791 vs $770, a 3% spread, and over the last day often higher. This strongly suggests that, whatever the reason, buying is once again being driven by China.”
Another development that has stuck out as potentially supporting bitcoin’s recent price movements is India Prime Minister Narendra Modi’s efforts to take 500 and 1,000-rupee notes out of circulation. While this move has been justified as an attempt to help reduce corruption and black market activity, it could potentially push India into a liquidity crisis.
Modi has pointed to a survey, conducted through a smartphone app, which shows 90% of participants supporting the move to eliminate these banknotes from circulation. However, the move has drawn the opposition of both opposition parties as well as former Indian Prime Minister Manmohan Singh.
Zivkovski made reference to this situation, telling CoinDesk that he believes this situation has boosted bitcoin’s outlook.
“The Indian crackdown on cash/rupees has most probably contributed to the rise [in bitcoin prices] with the injection of fresh money and bitcoin users from India,” he said.
Elsewhere, ether, the digital currency powering the ethereum platform, continued to struggle this week, falling to its lowest price since April.
Ethereum has faced several challenges lately, including undergoing three forks in the space of a few months as the platform attempts to overcome technical challenges.
Ethereum underwent a hard fork dubbed ‘Spurious Dragon’ on 22nd November, which was an attempt to rectify some complications that stemmed from continued attacks on the network. An attacker had left a significant number of empty accounts in the blockchain, and Spurious Dragon gave developers a way to remove these accounts.
While this hard fork represented an improvement, two major Ethereum clients – Geth and Parity – implemented the code from this fork in different ways. As a result, there came a point where the two clients did not agree on deleting a certain account.
While Geth did delete the account, Parity failed to do so, which resulted in a brief split in the network or “Thanksgiving fork”.
In spite of Ethereum’s continued challenges, several market observers have spoken out about the network’s recent progress, pointing to what they called progress in fundamentals such as mining distribution and unique address growth.
Zcash chills out
Zcash prices have calmed down a bit lately, trading in a range between $60 and $80 for most of the week, Poloniex figures reveal.
The digital currency traded within this range after experiencing far greater fluctuations earlier in the week, falling more than 25% from $89.45 at roughly 12:00 UTC on 26th November to $65.59 at 22:00 UTC on 27th November.
The currency’s available supply is now roughly 133,000 ZEC, a figure that represents less than 1% of the 21 million ZEC tokens that are scheduled to be mined over time.
Both Zivkovski and Eliosoff emphasized that at this point, adoption is crucial to supporting the price at current levels, given that supply will continue to increase.
Thus far, Zcash has showed promise by leveraging zero-knowledge proofs called zk-SNARKS to enable counterparties to conduct transactions without revealing themselves. However, the cryptocurrency has thus far obtained little adoption;
Until the digital currency has a viable use aside from trading, its value is highly speculative.
This article is not intended to provide, and should not be taken as, investment advice. Please consider all blockchain investments with caution.