Bloomberg: Fundamentals may drive Bitcoin's price to $400,000, not FOMO

15 Jun, 2019
by Richard Allen
Bitcoin
Bloomberg: Fundamentals may drive Bitcoin's price to $400,000, not FOMO

In a recently published op-ed on Bloomberg, Aaron Brown writes that the next sustained Bitcoin rally could be more determined as it will be driven largely by fundamentals and global finance events than FOMO.

Brown states that, while the crypto market today is much different than it was during the previous two rallies in 2013 and 2015, the volatile nature of the market likely won’t be disappearing immediately.  if Bitcoin’s pattern over the last two rallies persists, Bitcoin could rise to $60,000 before soaring to $400,000 and followed by another 85% crash.

The Bloomberg writer argues that the previous two rallied were largely fueled by retail investors and that this time around its fundamentally different. For one, the crypto market cap, currently at $272 billion, is significantly larger than it than the $1 billion seen in 2013, and $3 billion in 2015.

Additionally, there are far more cryptocurrency investors today, and around $30 billion worth of institutional money went towards funding new platforms and code bases. There is also more regulatory clarity as major institutions like Facebook and JPMorgan are investing in the industry.  

However, while the industry as a whole appears more sturdy, Brown says that this doesn’t eliminate the risk of a bubble and crash. Although, as the industry grows and matures, the chances and severity of this decline. He suggests future drawdowns could be limited to around 20% instead of 85% or more.

By looking at the evidence, Brown believes the next Bitcoin bull run could be different, with prices being driven by fundamentals rather than investor sentiment.

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