Despite January being a historically bad month for cryptocurrency, bitcoin has made a strong comeback this week, leading to gains across the board for all large-cap coins.
Bitcoin gets safe-haven appeal
Analysts have attributed the bitcoin surge to both technical and fundamental factors.
As veteran chartist Peter Brandt points out, bitcoin has formed an inverse head and shoulders pattern on the daily chart, which typically portends bullish price action.
Aside from technical factors, the main driver of bitcoin’s price action this week appears to have been the events in the Middle East. The cryptocurrency has been displaying clear, safe haven behavior and responding to geopolitical developments with violent swings in price.
As analysts including Mike Novogratz and Peter Schiff, have noted, Bitcoin has moved in tandem with oil and gold, suggesting investors are viewing it as a risk-off asset that can retain its value in troubled times.
But not everyone agrees. Contrarian economist Alex Kruger suggests bitcoin is currently too small to take its place on the world stage as a safe haven asset, and that any price action which suggests this is likely to be the result of a self-fulfilling prophecy.
Nevertheless, the recent de-escalation of tensions in Iran still appears to be having an effect, with bitcoin falling into a correction as the prospect of world war three becomes less likely.
Bitcoin has now sunk from a local high of $8,450 to touch support at $7,700. If this breaks, we could see the price move lower to $7,500. On the other hand, a break of the previous high at $8,450 is likely to a larger run up as traders anticipate a move towards $10,000.
Ethereum benefits from Bitcoin surge
As usual, Ethereum is following bitcoin’s lead and is now sitting at $135 after touching $147 earlier in the week.
The fundamentals of the project seem stronger than ever, with the successful completion of the Istanbul and Muir Glacier upgrades leaving the path wide open for the next phase of Ethereum’s growth and its eventual pivot to Proof of Stake.
StarkWare, a project that is working to help blockchains scale, said this week that the next phase of development could see Ethereum scale to handle 9,000 trades at 75 units of gas per trade, as compared to the present capacity of 2,000 trades at 300 units of gas per trade.
On the charts, the price of Ethereum has critical support around $124. A break of this level could lead the price to fall as far down as $100. To the upside, a move past $150 is likely to portend a larger bullish move to $170.
Monero spikes on comments from Coinbase CEO
Privacy coin Monero has realized larger gains than both Bitcoin and Ethereum after Coinbase CEO Brian Armstrong made bullish remarks about blockchain anonymity In an official blog post.
In total, Monero has appreciated by around 30% in the last week, beating Bitcoin and Ethereum by over 10%.
John McAfee, who recently admitted his million-dollar Bitcoin prediction, was a “ruse designed to onboard new users,” has also recently praised blockchains that offer privacy features.
On the charts, Monero is now sitting below support at around $60. If this key level is breached, we could see a move up to $80. If price moves to the downside, then strong support can be found at around $47.
The information in this article is for informational and educational purposes only and should not be considered financial or investment advice. Investing in ICOs, IEO’s, cryptocurrencies, or tokens is highly speculative, and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.