Bitcoin has gained more than 120% in the past three months. Is it time to go all in?

Since the emergence of Bitcoin, it has been declared "dead" more than 360 times.

Recently, angel investor Jason Calacanis said on Twitter that Bitcoin is likely to be replaced by a new technology.

However, Bitcoin has been rising for nearly three consecutive months since February, with the price soaring from around US$3,600 to around US$8,600. Although the current rise has slowed down, the increase in the past three months has still exceeded 120%.

Driven by the recovery of Bitcoin, other mainstream currencies also rose in response. EOS even regained its high of $8, reaching a new high this year.

Such a gratifying growth also attracted media coverage.

Many media outlets claim that Bitcoin is the best performing asset worldwide during the same period, far surpassing mainstream investment markets such as oil, gold, the S&P 500 and Nasdaq.

After nearly a year of silence, has the Bitcoin bull run arrived?

Market sentiment

In fact, market sentiment and cryptocurrency prices are inextricably linked.

According to Alternative.me data, the market panic and greed index is 71 recently, which has reached the highest value since the beginning of this year.

Tim Enneking, CEO of Digital Asset Management, believes that last year's continued downward trend suppressed investor demand.

Once Bitcoin begins to show a clear upward trend, a large number of users and funds will flood into the market, thereby driving the price of Bitcoin further up.

According to statistics provided by statista, the number of Bitcoin blockchain wallet users around the world has maintained a high growth rate, increasing by 8.6% in the first quarter of this year compared with the previous quarter and 44.7% year-on-year.

In addition to the lucky ones who happened to catch this round of market, there are more Bitcoin "shorts" and analysts who have been slapped in the face.

When Bitcoin broke through the $5,000, $6,000, and $6,500 mark from $3,600, many analysts believed that Bitcoin had reached its peak and was about to face a correction.

However, in reality, Bitcoin has directly broken through $8,000.

After experiencing this series of market conditions, investors lamented that "Bitcoin at more than $3,000 may never be bought again."

Bitcoin "shorts" also suffered a bloody lesson. Within a week, the amount of Bitcoin "shorts" liquidated on exchanges such as OKEx and Bitmex even exceeded 4 billion yuan.

After this round of Bitcoin surge, the bull-short situation has reversed.

According to the Bitfinex position ratio, the current long and short position ratio is approximately 56:44.

Reasons for the rise

An in-depth analysis of the rise in Bitcoin prices shows that the reasons for the rise are not without clues.

Some analysts believe that Bitcoin has the characteristics of combining the functions of a safe-haven asset and a risky asset.

As Sino-US trade frictions and conflicts intensify and the global political situation becomes turbulent, Bitcoin has become a safe-haven asset that is superior to gold.

In addition to political factors, Wall Street's financial technology giants have also extended olive branches to the crypto market.

As early as February this year, both JPMorgan Chase and Facebook announced the issuance of stablecoins to solve the problem of cross-border settlement.

Nasdaq, one of the world's largest stock exchanges, has attempted to tokenize its platform in addition to launching the Bitcoin Liquid Index (BLX) and Ethereum Liquid Index (ELX) at the beginning of the year.

Once the test is successful and approved, Nasdaq will be expected to become the world's first stock exchange to issue stocks using blockchain technology.

Fidelity Digital Assets, a subsidiary of Fidelity, the world's largest asset management company, is preparing to officially launch a regulated custody platform for relevant investors and institutions.

In the view of Galaxy Digital CEO Michael Novogratz, with the entry of traditional giants, Bitcoin can become an effective means of storing value.

In addition, Bitcoin halving is also considered an important factor in the rise in Bitcoin prices.

In fact, Bitcoin’s price will begin to rise one to one and a half years before each halving, and will enter the next bear market after reaching its peak. This is the economic cycle of Bitcoin.

The next round of Bitcoin halving is expected to take place in May 2020. The market's expectations for Bitcoin halving have also driven up Bitcoin prices.

Future Development

Although the crypto market remains hot, people in the industry still do not believe that the "bull market has arrived."

Tone Vays, a former JPMorgan trader and currency analyst, said that since Bitcoin has not experienced a significant correction since it broke through $3,200 (in early February this year), there has been no major correction between the $5,100-5,400 resistance level.

Therefore, the possibility of a Bitcoin price correction is high.

Zhu Chenglin, CEO of Xiyue Technology, said in an interview that although the recent IEO (Initial Exchange Offerings) has driven the market up.

However, the IEO craze has passed, and no new baton has appeared. The recovery during this period will soon end.

In fact, the surge in 2017 was directly related to Ethereum ICO financing, and the crazy influx of capital directly inflated the bubble in the crypto market.

Many projects can directly obtain tens of millions of dollars in financing with just a white paper and a few titled "big guys".

However, financing that comes too easily cannot generate new value. These ineffective projects can only be "paper talk" and do not promote the development of blockchain technology in any way.

Many new financing models that emerged later, including STO and IEO, are unable to promote the application of blockchain technology.

In the end, it's just a game of money.

However, for blockchain technology itself, although many projects have tried to realize possible scenarios, we have to admit that cryptocurrency is the irreplaceable field of blockchain technology.

In addition, the regulatory attitudes and regulations of various countries remain an important obstacle to the development of cryptocurrencies and blockchain technology.

In addition to China, India and other countries that strictly oppose cryptocurrencies, the attitude of the important major country, the United States, is also unclear.

It is understood that the Bitcoin ETF application submitted by VanEck and SolidX as early as last year was again postponed by the U.S. Securities and Exchange Commission on May 21.

This means that the U.S. Securities and Exchange Commission still believes that the "fraudulent and manipulative behavior" in Bitcoin will seriously damage the interests of investors.

In addition to the Bitcoin ETF, the Bitcoin futures contracts launched by Bakkt have also been repeatedly delayed, and the one that is about to be launched in July is only the user acceptance test (UAT).

Although the price of Bitcoin has risen, there is currently not enough momentum to sustain this round of Bitcoin market.

For investors, cautious investment is a safer option than blindly believing in the arrival of a bull market.