Bull Market Early or Bear Market Trap?

For virtual currency investors, the more important question is whether this round of currency price increases is a bull market restart or a bear market trap.

Last night, Bitcoin experienced a soaring price in just an hour. The price rose from approximately US$6,800 for violent conflict to a maximum of US$8,100. It rose by nearly 20% during the day. Under the leadership of Bitcoin, other virtual currencies have also ushered in a strong rebound, with a single currency’s revenue even exceeding 50%. Faced with the collective heating up of the virtual currency market, many investors shouted “the bull market is back.”

According to data from the CoinMarketCap website, the market value of Bitcoin has increased by nearly 20 billion U.S. dollars in one day, and the entire virtual currency market has also experienced overall market growth. There is no “seeking” effect. According to Bitcoin’s daily trading volume of more than 9 billion U.S. dollars, billions of incremental funds should have entered the market yesterday instead of stock funds.

In fact, in the booming era of Bitcoin, the digital currency trading platform Bitfinex also recorded many large transactions. With the increase in the purchase of bitcoins, many short positions were forced to close out, further expanding the upward trend of the market. For this phenomenon, Cypher Capital data director Nick Kirk also agreed. At the same time, he also believes that this sharp rebound is likely to be a response to the release of early regulatory pressure.

Pantera Capital Management, one of the world’s largest digital currency hedge funds, said that Bitcoin has bottomed out. $6,500 is the low point of the Bitcoin bear market. Bitcoin will be above this price for most of this year, and may even exceed last year’s all-time high of $20,000.

Fundstrat founder Tom Lee also expressed his confidence in Bitcoin. He believes that the current Bitcoin price-to-book ratio and other indicators are almost the same as the bear market at the end of 2014, and important technical corrections have been formed. Based on this, he stated that the value of Bitcoin may more than triple this year and rise to $25,000 by the end of this year.

Historical data shows that Bitcoin did rise in the second quarter of the calendar year. In the second quarter of 2011, Bitcoin’s growth rate was as high as 1964%, 2012’s growth rate was 36.25%, 2016’s growth rate was 61.98%, and 2017’s growth rate was 131%.

Of course, Bitcoin OTC trading volume also shows signs of market recovery. Since March, Bitcoin transaction volume in Canada, Europe, Vietnam, Mexico, and Vietnam has risen and reached a record high.

With the successive entry of major financial institutions such as hedge fund giant Soros and the top financial group Rockefeller family, the financial scale of the virtual currency market will further expand.

However, it is worth noting that although Bitcoin currently has a strong rise, it is still in a downward trend channel and has not yet been effectively broken. Whether the virtual currency market has actually reversed remains to be seen. Investors should always remain vigilant and pay attention to position management.

More importantly, the world’s major Bitcoin markets, including the United States, are seeking to establish a regulatory framework. Regulatory uncertainty will inevitably have a greater impact on the short-term development of the virtual currency market. In the long run, an orderly and healthy market can go further.