Bitcoin Price Hits $6000, What is the Future for Other Cryptocurrencies?
Colin First
Updated
The turnaround in the bitcoin market ever since it went down due to Chinese regulators action, a few weeks back, has been nothing short of spectacular so far. When bitcoin prices dropped by more than 20% at that time, there were many inside and outside the market who had predicted that the bitcoin industry was doomed and that it was only a matter of time before everything went bust in the market.
Bitcoin 4H Chart
But contrary to the expectations, the prices have had a slow and steady turnaround and the beginning stages of the recovery in the prices were quite slow. But as prices began to recover, more and more traders and speculators began to regain their confidence in the bitcoin market and they led the buying which led to bitcoin prices gathering pace as they spiraled upwards. Now, just a couple of days back, it broke through the $6000 region and the progress from the $5000 region to $6000 has been quick and steady. This only promises that more such strong moves are in store in the future. We would be looking towards the $5000 and $5500 as strong regions of support with the resistances coming in at $6000 and the previous highs at around the $6200 region. A break through the $6200 region is likely to carry prices towards $7000 in a swift manner.
This raises the question of how long this uptrend would last with the Bitcoin gold fork happening in the next few days and another fork scheduled in the industry in November. Though the last fork in August was managed well, every fork has to be dealt with care to ensure that there are no errors and also to ensure that the entire network remains stable. The launch of bitcoin gold, in a bid to give back control to CPU and GPU miners by reducing the dependency on ASIC, is welcomed in the industry as a good move but still seems that a large part of the bitcoin network, including many exchanges, are not yet ready for the same and hence seem to view it in a doubtful manner. It could also lead to a further split among investors and miners and some of them could be weaned away to bitcoin gold, same as they have weaned away to Bitcoin cash after the previous fork.
If this is worrying news, then some analysts in the industry say that the fork in November could be even more challenging as the fork has been born out of a strong group of Bitcoin miners who favor Segwit2X and this fork would lead to another new type of bitcoin currency. This time, the impact on the bitcoin industry is likely to be larger as this group is a much larger group of miners and developers and they are likely to be weaned away to a new cryptocurrency. The full impact of the November fork is still unclear and we would be able to get a better picture as we get closer.
Ethereum is Not Following Bitcoin
All these events in the bitcoin industry also make us wonder whether this strength in prices and the market, in general, in particular only for the bitcoin market or whether it is true for the other cryptocurrencies as well. A look at the next cryptocurrency, Ethereum, which is considered as the heir apparent for bitcoin, paints a bleak picture though. Ethereum prices have failed to match the run in the bitcoin prices ever since the ICOs were banned by the Chinese regulators and few others followed the similar action as well. Till then, ETH prices were following the price action of bitcoin but since then, Ethereum has struggled to gain traction.
Apart from the ban on ICOs, the just completed fork in the ETH industry has also added pressure to the prices. Though the fork has been completed successfully, it is not yet deemed stable and it is believed that it would take at least a couple of months for the fork to become stabilized and for it to be announced to be stable. This has been affecting ETH prices which now trade slightly above the $300 mark, well away from its all-time highs near the $400 region. The support for ETH prices come in around the $270 region with a lot of selling seen in the $320 region and the $340 region. We do not see the ETH prices breaking through and staying above $340 region for now as the market still comes to terms with the hard fork.
ETH/USD 4H Chart
Furthermore, we continue to believe that in the long term, Ethereum is likely to outlast a lot of other cryptocurrencies as the fundamentals underlying ETH appear to be much stronger than for others. ETH is also led by a very strong team which has the support of a lot of investors and traders who continue to believe in the long-term strength of this crypto. Also, with many ICOs continuing to be launched in different parts of the world and with this trend likely to continue in the future also, we believe that traders would have to deal with ETH for a long time to come and hence it is not something that can be forgotten easily. On the other hand, the continued weakness in prices is likely to drive away a lot of speculators looking for quick and good profits and this is something that Ethereum market, like the bitcoin market previously, has to overcome to in order to improve its trust factor.
On the other hand, bitcoin cash, the crypto that was born out of the fork in the bitcoin market in August, has been holding fairly steady over the last few days. It does not seem to be affected by what is going on in the bitcoin market but seems to be on its own journey to discovering its prices. The crypto prices had shot to around $970 towards the end of August based on the initial euphoria and expectation that it would have a strong usage and demand like the main bitcoin, only to crash lower. It went as low as $280 towards the beginning of October and since then, it has been quietly moving higher without being spectacular. As far as market capitalization is concerned, it continues to be in the top 5 which augurs well not only for bitcoin cash but for other cryptos that are likely to be born from the bitcoin market as investors would now know what to expect from them.
Bitcoin Cash/Bitcoin 4H Chart
But with the coming of bitcoin gold, investors are likely to be presented with a lot of choices to invest in, as long as they want to stick to bitcoin and its derivatives. This is likely to take away some investors and miners not only from the main bitcoin market but also from bitcoin cash, which is then likely to add a lot of pressure on prices of bitcoin gold in the near future. We expect bitcoin cash prices to fall in the short term as the market comes to terms with bitcoin gold and also gets itself ready for the next fork in November and then it remains to be seen whether bitcoin cash would continue to be able to hold its position in the top 5 or whether it is likely to be replaced by the upcoming variants.
Litecoin Struggles at the $60
Another crypto that has been having a stable placing in the top 5 of the market capitalization ranking has been Litecoin. This coin has been around for quite some time without ever having shaken up the industry as such. It has managed to remain in the headlines but it had a turbulent time over the last 2 months as it visited both its highs as well as its lows during this period. It seems to be struggling at this point of time but as said before, it has never been in the forefront and never known to bring in large volatility or liquidity and has always been content to be the middling crypto which exists there and thereabouts.
Litecoin 4H Chart
For the short term, it appears to be looking for some strong support which would help investors and traders to get interested in buying it again. The important support regions to watch out for would be around $52 and then $48 and we believe that there would be a lot of buying support in these regions which should then push back Litecoin prices towards $60 in the medium term. For now, it seems in a consolidation mode and does not seem bothered by what is going on in the bitcoin market.
The cryptocurrency market seems to be thriving at this time with bitcoin leading the way, as it usually has. Though the market has been facing many hurdles with different kinds of restrictive and regulative actions from the authorities, the industry has managed to not only survive but also ensure that it comes back with double its strength.
This only shows that the market has the full support of investors and traders and hence is likely to last for the long run despite doubts being raised by certain financial leaders. In fact, even in the financial industry, the opinion seems to be mixed with certain leaders suggesting that the industry would go bust in the medium term while other leaders acknowledge the fact that the industry is here to stay for the long haul. As we heard from JP Morgan CEO, Jammie Dimon that ‘Bitcoin is a fraud but Blockchain is good’, it seems that no one could stay indifferent towards Crypto innovative technology. Traders would be well advised to not only view these cryptocurrencies as instruments to make a quick profit but also try and understand the underlying concepts and the technology which would then help them to make better trading decisions.
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