One common element of a bull rush is to have pundits predicting new highs in an almost rabid desire to see the asset value continue to increase. Just watching the way Bitcoin has been trading over the last few days, with journalists pointing out every resistance level it has broken through, it seems like we are heading into a much more optimistic place for crypto.
The shift from bearish to bullish sentiment becomes almost self-fulfilling if enough people believe it. With quotes like “the psychological resistance point of $6,000 is just within reach” and various technicals (the 21-month exponential moving average) giving positive outlooks, things do seem to be shaping up for Bitcoin.
As the largest and most well-known of the cryptocurrencies, Bitcoin tends to lead the way for all other cryptocurrencies. Having hit a recent low of $4,120 and now risen to around the $5,900 mark at the time of writing this, that is a 40% increase in price that can only signal good things.
The Sober Predictions
On a macro level, it is likely that Bitcoin will see a pullback at some point. This wouldn’t ruin the bullish sentiments but would probably dampen some of the fervor. This is why Fundstrat analyst Robert Sluymer believes we are still in the accumulation phase. His overall belief is summed up below:
“While it’s premature to conclude Bitcoin will not retest support near $4,300, we would encourage traders and investors to remain focused on the bullish longer-term technical profile developing.”
This sounds like the most sober of the bullish points of view on Bitcoin and its price, as it reflects the fact that it’s not always going to be all sunshine and daisies.
Another bullish signal is coming from more investors entering space of cryptocurrency investing. For example, tennis player Serena Williams just announced that she had invested in Coinbase as well as over 30 other companies. Venture capital is expected to see an even stronger shift towards cryptocurrency and blockchain startups over the next year, and studies are predicting all-time highs. Additionally, IDC Government has just predicted blockchain spending to increase to $123.5 million by 2022. To put this number in perspective, it is over 12x the $10.7 million it was in 2017.
To balance all these bullish ideas out, there are still people like Charlie Munger and Warren Buffett who believe Bitcoin to be a big hoax. Deriding the cryptocurrency as “totally asinane” and announcing anyone trading it to be jumping on a bandwagon of short-term profits, these two elderly gentleman are very much in disagreement with the ethos of Bitcoin.
However, when one analyzes their investing history, it makes sense. Berkshire Hathaway, the company they run together, has never been about betting on change. Instead, it is all about investing in the belief that the status quo will continue and big companies will remain big companies and continue to solidify their competitive advantage.
Never have they invested in Internet stocks, because they knew they didn’t understand it. That is why it is notable that they are ripping into Bitcoin, when they also likely don’t understand it. A healthy level of criticism for the cryptocurrency is necessary, but this needs to come from a more informed viewpoint.