The scaling debate has come and gone. For now, both sides, Bitcoin and Bitcoin Cash, have the chance to make their case with miners, traders and everyday users why their solution is the best. Bitcoin as the incumbent has an advantage but we have to see what happens.
Traders among you that follow the stock or currency markets were not surprised to see a rise in Bitcoin’s price (and value) after the August 1 fork. Uncertainty is always bad for trading….
Now that the matter is settled and Bitcoin cruised through $4000 to another all time high, here are 5 reasons we think the rise will continue through $5000 and beyond…..
- Wall of worry: Traders should be familiar with this term. When obstacles (like scaling) present themselves but Bitcoin keeps rising, markets say they are climbing the wall of worry. Bitcoin’s climb of the wall of worry and rise after Aug 1 are bullish signals we should not ignore.
- Mempool is down: One of the understandable concerns about Bitcoin’s ability to process transactions is about how many transactions are stuck in the Mempool waiting for confirmation.
The Mempool is way down from over 50,000 transactions waiting in June to under 20,000 waiting. Lows in July were well under 10,000 transactions waiting for confirmation. A good fundamental sign.
- US and China Inflation: The US is looking at 2% inflation for the year and while China is just under 2% for the year, their Producer Price Index, the cost producers pay for what they need to produce goods increased by 5.5% so far this year.
Like it or not, the US and China are by far the largest markets for Bitcoin so what happens there affects the outlook for Bitcoin. Reminders of inflation and the fixed number of Bitcoins created mean a good chance for Bitcoin’s value to increase in USD and CNY if dollars and yuan become worth less over time. And fiat currencies always lose value over time. That won’t happen to Bitcoin and Bitcoin’s utility can keep growing.
- Geopolitical: Is Bitcoin starting to match gold for safe haven status? Unrest whether from Venezuela, North Korea or sub-Saharan Africa means a flight to safer quality assets. Often this means Gold or USD or US Treasury Bonds. Most people around the world can’t access those 3 assets, but they can access Bitcoin.
What do you think? Is Bitcoin becoming a safe haven asset?
- Institutions starting to take notice: Some institutions are starting to buy or advise clients on Bitcoin. Goldman Sachs is starting to advise clients on Bitcoin. Fidelity covering BTC for individual investor tracking. Any piece of mainstream or professional US investor dollars going into Bitcoin will cause a price rise since that’s what happens when supply is fixed but demand grows.
We know many of you are bullish on Bitcoin, but why? Fundamentals? Technical chart patterns? Other reasons? Reply in the comment section below. We’d love to hear what you think.