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The bitcoin price rebounded on Sunday, helping to design a broader recovery in the cryptocurrency market following the latest downtrend that brought values to the 15-month lows. In all likelihood, the last highest move is nothing but a rebound from a dead cat as short-sellers seem eager to test new lows in the near future. In the long run, however, the bitcoin looks set to return to $ 10,000 based on a regression model of Metcalfe's law (we'll talk about this later).
BTC / USD update
The Bitcoin recovery track showed a sizable rise on Sunday, with price action concentrated well north of $ 3,500 on most major stock exchanges. The leading digital currency was traded within a range of $ 300 on Bitfinex, with the latest reading showing $ 3,679. This represents a 5% gain for the day. Bitcoin peaked at $ 3,745.10 at the start of the day, around $ 450 more than the Friday minimum swing.
Daily trading volumes on all virtual currencies amounted to $ 5.1 billion, according to CoinMarketCap. This is well above the minimum threshold needed to support a much broader short-term rally. (As reported earlier by Hacked, Bitcoin struggles to design higher peaks when 24-hour volumes fail to beat $ 4 billion.) Bench-based trading is also likely to be equal to or greater than this amount.
The aggregate data provided by CoinMarketCap show an average price per currency of $ 3.586, up 5.1% from the previous day. At current prices, bitcoin has a total market capitalization of $ 62.5 billion. At this time last month, the digital currency was valued well north of $ 110 billion.
Despite the last recovery effort, the bitcoin is still under the control of hands down, which means that a $ 2.00- $ 3,200 support zone test is likely. This area is likely to trigger a new wave of purchases as bitcoin resumes its consolidation consolidation landfill cycle.
The total cryptocurrency market was valued at $ 115 billion at the time of writing, which is equivalent to the bitcoin capital market just over a month ago. In the last 24 hours, the market has added around $ 7 billion, with all major currencies reporting gains.
Market value?
The latest assault on bitcoin prices has called for speculating that the digital currency is trading well below its fair market value. This is further confirmed by the Forbes bitcoin price estimator, which fixes the fair value of bitcoins closer to $ 4,900. The data are based on a regression model based on Metcalfe's law, which suggests that the value of a network is proportional to the square of the number of connected users.
By analyzing the number of unique active users and the volumes of daily transactions, Forbes estimates that the price of bitcoin should return above $ 10,000 by the middle of 2019. Of course, bitcoin does not always behave according to the rules of fundamental analysis. Having said that, it is important to note that Forbes expects active users and daily transaction volumes to bounce significantly during the forecast period, which makes forecasts more attractive compared to Tom Lee's $ 15,000 price target (by December 31, 2018, not less!).
Forbes claims that the estimator has predicted the price of bitcoin with an accuracy of up to 94% between 2012-2017.
While it is impossible to say where bitcoins could end within six months, the forecast period could be an important window to measure the future trajectory of the currency. By June 2019, Intercontinental Exchange and Nasdaq will already start their bitcoin markets and the US Securities and Exchange Commission (SEC) will have already taken part in the VanXock SolidX Bitcoin Trust. Investors can also expect new developments regarding security token offerings and regulatory approval process for exchanges seeking to list them.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. It holds investment positions in the currencies, but does not carry out trading activities in the short term or daily.
Featured image courtesy of Shutterstock.
