Having bounced back from China's exchange closures and Dimon's damning, Bitcoin just broke above its pre-China ICO ban highs and traded above $5000 for the first time in history (even as Russia decided to block local access). There was no looking back as the cryptocurrency is now trading $5240 - a new record high.
As Coindesk notes, prices had dropped to a low of $2,980 in mid September after China banned token sales and local cryptocurrency exchanges. However, in the subsequent days, BTC quickly regained poised, reportedly due to a pick-up in trading volumes in Japan, South Korea and other markets. The rotation of money out of the ether and ethereum-based coins and into bitcoin also helped the cryptocurrency scale new heights.
Increased institutional interest seems to have played a role in boosting bitcoin prices. For example, a 'bitcoin desk' at Goldman Sachs would certainly be a game changer. News had hit the wires earlier this month that Goldman Sachs is considering a brand new operation which would be dedicated to bitcoin trading.
Still, while skeptics continue to call bitcoin rally a bubble, the price action analysis indicates no serious trouble ahead for the cryptocurrency.
Resistance is seen at $5,378.56 – 161.8 percent Fibonacci extension of the move from the Sep 15 low – Sep 18 high – Sep 23 low.
As Iqbal V. Gandham, Managing Director at eToro UK, commented:
“Recent criticism from industry and regulation crackdowns in China and Russia spooked markets in recent weeks and caused the Bitcoin price to plummet. So we expect some investors to be surprised by Bitcoin bouncing back to this record high so soon afterwards.
“Yet Bitcoin was designed to operate outside of the influence of governments and central banks, and is doing exactly that. So to us, this bounce back in price is no surprise.
“In reality, whilst we’re excited to see Bitcoin hit this record high, this is just the beginning for Bitcoin. Bitcoin has a lot further to go than this price point to become a real world currency, as it was designed to one day be. Most are unaware that in future people will not spend a single Bitcoin. Instead people would spend the underlying tokens, called Satoshis, in the same way we spend coins and not a bar of gold. A single Satoshi is only worth $0.00005 currently. Clearly, for this to gain spending power, the price of a Bitcoin will need to be significantly higher than $5,000.
“This price peak may boost more support for the bubble argument we’ve seen from investors in recent months. But we continue to argue these calls on bubble territory are coming far too early in the story for Bitcoin.
“This record is an exciting milestone and sign of market confidence in the outlook for Bitcoin and the underlying technology behind the cryptocurrency, Blockchain. But we expect many more milestones like this to come.”
Furthermore, appears Mike Novogratz may be right after all... while bitcoin is a bubble, the mania is justified, because it is a technological advancement that promises to fundamentally alter our lives.
"I can hear the herd coming" Novogratz said.
And bubble or not, Novogratz concluded eloquently on the extreme nature of cryptocurrencies' potential...
“Remember, bubbles happen around things that fundamentally change the way we live,” he said.
“The railroad bubble. Railroads really fundamentally changed the way we lived. The internet bubble changed the way we live. When I look forward five, 10 years, the possibilities really get your animal spirits going.”
Bitcoin is set to become "the biggest bubble of our time," he added, and could reach $10,000 very soon due to fast-building interest.