The Bitcoin bubble is turning into a mania that could help it reach $10,000 by Christmas, before heading for another major correction.
The people’s currency has passed several tests in recent weeks. One of them is the “technical test,” the crossing of price resistance marks like 5, 6 and 7,000 dollars.
That’s a bullish sign for investors who look at price and volume charts to determine the direction of the market momentum.
|Coin/Investment Trust||7d change*|
*As of November 8, 2017, at 3.30 p.m.
Another is the “Wall Street test,” the warming up of major financial players and financial exchanges to the digital currency, as discussed in a previous piece here.
That’s a bullish sign for investors who look at “market fundamentals,” major developments that could boost the demand for the digital currency.
A third test is the “China test,” the ability of the Bitcoin market to shake off a ban in trade of the product in one of the largest markets for digital currency in the world.
That’s also a bullish sign for Bitcoin, as it proves to some that the digital currency can survive and thrive, even as big governments try to crush it.
Meanwhile, the calling off of the Bitcoin hard fork removed a source of uncertainty surrounding cryptocurrency markets.
These bullish signs have brought back the buzz for the digital currency, helping it get closer to the “tipping point,” the stage of the Rogers curve where the demand reaches a cascade. That sets the stage for higher prices, as there isn’t enough supply to accommodate the soaring demand.
Then there’s hype fueled by the higher prices that draw more investors into the market, pushing prices even higher.
And the higher Bitcoin prices go, the bigger the hype, drawing even larger numbers of traders and investors to the market.
Eventually Bitcoin buyers will detach themselves from reality, buying Bitcoins with the anticipation of selling them to someone else at a higher price.
That’s how the Bitcoin bubble will turn into mania and drive prices even higher.
Perhaps, Bitcoin will cross the new landmarks of $8,000 and $9,000 quickly, possibly by Christmas, and reach $10,000, before the next big correction comes.
But all manias end badly, and hurt investors who joined the party late, as the great physicist Isaac Newton discovered the hard way.