Looks like crypto is back! Many have been saying that the winter has passed, but the fact is the performance of the market is nowhere near where they used to be during the boom of 2017. Recent movements in the market could signal a coming back of the old times. Bitcoin rose more than $500 within 24 hours, the kind of the rise we haven’t seen since the end of the crypto boom, this interestingly was caused by events that have nothing to do with Bitcoin itself. On this positive momentum, the market cap of Bitcoin has risen above the 100 billion mark after a long time.
It has been speculated for some time that Facebook will be entering the crypto market. Earlier, it was announced that the company will be developing a cryptocurrency for WhatsApp users. Whether Project Libra is the same project is unknown as of now, but it is highly unlikely that Facebook will be developing two similar products even for different platforms. The article came out in the Wall Street Journal, and this caused the price of crypto to rise. The project will be a stable coin which will be pegged against the US Dollar (USD) and will be used for incentivizing user interaction with ads within the platform. Even though many coins experienced a price rally, Bitcoin was by far the best performer. The market was already on the momentum towards positive trends and with this news the excitement went further, pushing the market cap of all cryptocurrencies combined to over $180 billion. The market cap rose by $10 billion over a period of 24 hours, which translates to about 4 percentage on intraday trading. This rally has made Bitcoin 55 percentage of the total market of crypto by value, this is the highest level in the year. Another interesting fact is that trading volume in Asia reached $20 billion which is more than the entire trade volume worldwide a few months back. This is certainly a sign that the market is full of enthusiasm and revitalized, Bitcoin still has a tough resistance at $6000 which might be hard to break unless another event like project Libra comes out.
Trouble at Tether
Stable coins are seen as the solution to many of the problems experienced by crypto, as the value of the currency is determined by the underlying asset. This usually means that a company owns and manages the asset as well as the currency. But many would point out once the price is fixed and the structure is centralized, it is no longer a cryptocurrency, which is not exactly a bad thing but this opens up the possibility of manipulation. Once it’s centralized, a cryptocurrency essentially loses its transparency especially when the underlying asset is managed by one company. This is exactly what is happening at Tether as many fear that there are not enough assets to cover for all the coins there are in circulation. The fear is that Bitfenix, the company which owns Tether, moved some of the assets from Tether to their exchange to cover for some loss. New York attorney general has made a public statement regarding this and said that Bitfinex moved $850 million, the company has put out a statement saying they are working with the regulators and law enforcement. The statement has also said that the allegations are false and both Tether and Bitfinex are financially stable. This has pushed many out of Tether and this has also helped Bitcoin.
The current bullish run has nothing to do with fundamentals rather the markets are excited at the fact that a big company like Facebook is getting into crypto. This legitimizes the cause of crypto and gives it validity, and shows the world that it’s not just for enthusiasts and fringe businesses, this new technology has a real-world use for multinational corporations. This bullish trend is a double-edged sword the same way markets rose after the announcement by Facebook, there could be a downward rally if Facebook decides to kill the project. JPM was killed off by JP Morgan bank recently and as seen in the past the fate of Tether stablecoins are always surrounded by controversy. The gains shown by the market is purely speculative and could vapourize anytime, but as some traders in the equity market would point out, valuation nowadays is based on sentiments rather than fundamentals which perfectly sums last week’s activities experienced by the market.
Follow us on Twitter, Facebook, Steemit, and join our Telegram channel for the latest blockchain and cryptocurrency news
You might also like
More from Crypto Market
Falling revenues is a concern for governments all over the world. This, along with the demand from the public for …