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Saturday, November 27, 2021

Bitcoin (BTC) Surges, is this Another ‘Climax’ Run?


Bitcoin (BTC) prices and related cryptocurrencies and stocks ran up again Wednesday, continuing a strong rebound that has intensified with last week’s Facebook (NASDAQ:FB) announcement that it is entering the crypto space.

Prices have surged roughly 40% since Friday, with the digital currency now flashing signs of a possible ‘climax‘ run.

The last time the Bitcoin price rose above 13,000 was in December 2017, the same month it reached its all-time high of 19,511 before a deep dive in value.

Bitcoin prices shot up 21% to $13,752, according to CoinDesk. Ethereum jumped 14%, Bitcoin Cash rose 7%, and Ripple (XRP) tacked on 3.3%.

Bitcoin is currently trading at: 12,772.15-140.99 (-1.09%)As of 6:10a BST, the market is open

Several factors are fueling Bitcoin’s rise. Facebook said last week that it will launch a digital currency, called Libra, next year, with big partners like Visa (V) and Uber Technologies (UBER). That was an indication that mainstream institutions are embracing cryptocurrencies and the underlying blockchain technology.

MoneyGram International (MGI) recently announced a deal with Ripple to use that cryptocurrency in payments. Ripple also took a stake in MoneyGram.

Also, cryptocurrency mining-chip giant Bitmain Technologies reportedly is getting ready for an initial public offering.

Finally, investors have Bitcoin fever again. Bitcoin prices are going up, and that makes many want to rush in, bidding up the price.

The Big Q: Is this another Climax Run For Bitcoin?

The Big A: The rapid and accelerating run-up in Bitcoin prices could hit a high soon. After a climax run, stocks, commodities and currencies usually lose more than 50% their value fast. They can take months or years to recover, if ever.

Bitcoin has already had a climax run in late Y 2017.

Investors in Bitcoin and related coins and stocks may want to take at least partial profits to lock in some big recent gainers in here.

Experts say there’s a big difference between Facebook’s Libra and the more speculative Bitcoin and most other cryptocoins.

“Libra is backed by a reserve of real assets such as bank deposits and Treasury bills. That gives it intrinsic value,” CMC Markets analyst Margaret Yang told the FT. She added that many other major cryptocurrencies, including Bitcoin, are “backed by nothing.”

Oanda senior analyst Craig Erlam also drew parallels between the recent run and the asset’s prior bubble.

“While I understand the excitement for the community that a company like Facebook, backed by other big names, has launched its own coin, this just feels a lot like last time and we all know what happened then,” Mr. Erlam said in a research note. “Perhaps this time the drop-off will not be so bad as we are seeing more mainstream adoption, but it may be naive to think that it cannot come crashing down again.”

Stay tuned…

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