Bitcoin enjoyed a much-needed boost on Tuesday, moving from sub-$14,000 levels through to $15,675 by the end of the day. The gains came in spite of Bitcoin continuing to receive negative press on an almost hourly basis.
For the Bitcoin bulls, the good news is that the momentum continued through this morning, with Bitcoin managing to break through to $16,000 levels and hold on. At the time of writing, Bitcoin was up 1.97% to $16,075.04.
The gains may not be that impressive, but investors will take some comfort from the fact that the lows have picked up through the first half of the week, suggesting that there may be more on the horizon, though things may prove to be a challenge should volumes remain on the lighter side and investors focus on the negatives, all too aware of how quickly market conditions and appetite can change.
For the rest of the day, there has been a reasonable amount of support from the futures markets, with the Cboe XBT Bitcoin January futures contract gaining $340 to $16,150 and with February’s contract up $365 to $16,300. The numbers suggest that support will be in place, but unless we see futures move back to intraday highs of $16,570 and $16,670 for the respective contracts, Bitcoin is likely to face an uphill battle to break out to $16,150 and beyond.
Hashrates have been on a downward trend since 18th December’s peak and, while some may attribute this to the holiday season, the fact that a significant amount of the hashpower is generated in China suggests that the softer hashrates may be as a result of concerns over Bitcoin’s outlook.
News of more congestion on exchanges hasn’t helped Bitcoin’s recovery, with Coinbase having stated that Bitcoin and Ethereum were both experiencing backlogs equivalent to a few hours of delay.
Exchange platform stability remains one of the key concerns for investors and never more so with the sizeable swings being seen in recent weeks. No investor is going to want to see a Bitcoin price collapse, with exchanges unable to meet the demand of transactions that could see some take quite a sizeable hit. Delays of more than a few hours could be the equivalent of a $2,000 – $4,000 slide in Bitcoin’s value.
For now, the futures markets are not pointing to anything sinister, but should transaction delays continue to be experienced across the mainstream exchanges, things could change rapidly.
If investors were considering which of the three Bitcoin’s to be invested in, those having selected Bitcoin in last week’s sell-off will be thinking that they’ve made the right choice. Time will tell whether the talk of hard forks et al will cause the smarter money to take a more cautious view on Bitcoin’s price outlook. For now, we haven’t seen futures prices collapse.
Across the major cryptocurrencies at the time of writing, IOTA is leading on the day, up 13.8% and considered to be the HODL of the day.