Market Sentiment Rising as Bitcoin Breaks $10,000 Psychological Barrier
It has been a rocky couple of weeks for cryptocurrencies, with total market cap falling from an all time high of around $830 bn on Jan 7th to a low of $279 billion on Feb 6th. This represents a decline of around 66%, making it the 4th worst crash to date.
There are a number of explanations for this crash, including various rumors of bans, regulatory concerns and some big hacks, but these are really only catalysts to an overheated market. The truth is that the markets were due a correction after the crazy run and it is likely healthy in the long run.
Another one of the explanations was that the crypto markets suffer a cyclical dip around the same time every year, similar to the January dip experienced by stocks. Now this period is coming to the end, we are beginning to see the markets recover. There has also been a string of positive statements from regulatory bodies and politicians, which has further improved market sentiment. All you have to do is head over to r/cryptocurrency and assess the tone.
Now Bitcoin has broken the psychological $10,000 barrier, the FOMO cycle is to likely begin again. As positive news of this milestone circulates, retail investors will begin to realize ‘Bitcoin is not dead’, leading to people buying back in or new entrants buying into crypto. This will drive the price further and so the cycle continues. Of course, this is only speculation and we never know what is around the corner, but for now we remain bullish.