In the last week, the price of Bitcoin (BTC) witnessed one of its biggest rallies in recent years, climbing from a low of $9,326, up to as high as $11,287 yesterday. This was its highest value in 2020 so far.
—Bitcoin started it all.
It was the first cryptocurrency, and it launched an industry that now includes thousands. But who invented it, how does it work, and why is it so important?
What is Bitcoin?
Bitcoin (BTC) is a peer-to-peer cryptocurrency. Think of it as a digital token. You can't physically touch or hold Bitcoins, and all Bitcoin transactions are logged on a public, decentralized, immutable ledger.
The first official purchase using Bitcoin was for pizza in May 2010. Two pizzas from Papa...
Much of this growth occurred in the last two days, as Bitcoin surged through the $10,000 threshold on July 26, before breaking $11,000 last night (July 27). Since then, Bitcoin has cooled off slightly, falling back below $11,000 to its current value of $10,848.
The cryptocurrency is now up 15.6% in the last 7 days and 6.7% in the last 24 hours, after fluctuating between $8,500 and $10,000 for more than two months.
This rally has also had a knock-on effect to alternative.me's Crypto Fear & Greed Index, which now stands at a value of 76 standing for extreme greed. This is its highest value since July 2019—a time which saw Bitcoin spike to almost $13,800 in a rally not dissimilar from the one just seen.
Likewise, TradingView's range of technical indicators currently paint Bitcoin as a "strong buy," suggesting the rally is not over. The 1-day relative strength index sits at 74.64, indicating the market is neither overbought nor oversold and 16 out of 17 moving average indicators are currently bullish.
Overall, the sentiment among many prominent Bitcoin market analysts and traders remains bullish. According to Blockroots Co-founder Josh Rager, Bitcoin's recent activity resembles the pump seen in April 2019, which led to Bitcoin reaching over $13,000 months later. He also reasons that Bitcoin just broke up through a long-term resistance in the market structure—which is usually a positive sign.
The bearish view on Bitcoin
Others, however, aren’t so optimistic.
Euro Pacific Capital CEO Peter Schiff argued that Bitcoin keeps failing to successfully break the $10,000 mark and that each time it does so, it falls further back down. This was during a debate with Morgan Creek Digital partner Anthony Pompliano.
Schiff highlighted that during the two of the last three times Bitcoin rose above $10,000—in October 2019 and February 2020—it subsequently fell by 38% and 63%. In May, in a similar case, the pullback was 15%. “So, the question is, is the fourth time the charm for Bitcoin? It’s put up or shut up for Bitcoin. It’s got to hold $10,000 now, don’t you think?” Schiff asked.
Morgan Creek Digital co-founder Anthony Pompliano got into a heated debate with well-known Bitcoin critic and gold bug Peter Schiff today. For nearly two hours on “The Peter Schiff Show, the two duked it out over real gold, or so-called digital gold, was the right stuff.
The consensus was not achieved.
Gold price hits new all-time high amid Bitcoin climb
They did however mostly agree that the US dollar is currently being devalued and is potentially falling into an abyss.
Said Schiff: “We’re pr...
Others are similarly cautious if the rally will last.
"Our view is that we still believe the markets are pulled on the one hand by the inflation hedge story driving Bitcoin higher while at the same time the global economy is suffering a massive demand shock with the potential to drive Bitcoin lower,” Gavin Smith, CEO of Panxora toldForbes.
With Bitcoin currently consolidating under $11,000 and few significant resistance levels between here and $13,000+, another strong upwards break could push Bitcoin to heights not seen for over a year. But now that Bitcoin is heading back down, the pump could be over.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
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