The cryptocurrency market surged this week, with bitcoin and the major altcoins posting double-digit gains on improved investor sentiment and signs of growing institutional interest. Bold predictions of bitcoin’s future value also emboldened investors to re-enter the market after prices threatened a bearish reversal last week.
Equity markets also advanced over the previous five days, although trading was choppy after President Trump threatened greater military intervention in Syria. This environment lifted risk-off assets such as gold, which rose to two-and-a-half month highs.
Crypto assets put up huge gains this week, raising optimism that the worst of the downturn had passed. Gains were spread out evenly across most major assets, with the likes of bitcoin and Ethereum showing signs of a bullish breakout.
Bitcoin jumped above $8,200 on Friday, its highest in over three weeks. Ether prices climbed to a high of $529 for a five-day return of nearly 40%.
XRP spiked more than 43% this week after Santander bank announced the launch of a blockchain-powered foreign exchange service that uses Ripple’s technology.
EOS surged more than 55% ahead of a planned airdrop scheduled for Apr. 15.
The cryptocurrency market reached a high of $329.6 billion on Friday, its highest since Mar. 26. The digital asset class was last valued at $315 billion.
Trading volumes have more than doubled in recent days, with total transactions surpassing $23 billion on Friday. Meanwhile, bitcoin’s share of the total market fell to around 42%, another healthy indicator for the broader crypto asset class.
The crypto market’s recent breakout likely had an institutional component behind it, based on a simple analysis of price trends across major exchanges. For example, bitcoin’s initial break above $7,000 was first registered on Bitfinex, which indicates the presence of a large institutional order.
A cryptocurrency hedge fund boldly predicted Friday that bitcoin’s bottom is behind us and that buying pressure will accumulate in the near future. Pantera Capital, which controls roughly $800 million in assets, has told clients in a note that bitcoin’s darkest days may have passed.
The hedge fund has only made three such predictions since 2014, which means there is some conviction and merit behind its outlook.
Billionaire Tim Draper has also predicted huge upside for bitcoin, setting a price target of $250,000 per coin by 2022. In 2015, Draper correctly predicted that bitcoin would reach $10,000 by 2017.
Fears of a U.S.-Russia conflict in Syria escalated this week after President Trump threatened to rain down missiles on the Assad regime over its alleged use of chemical weapons. Though conclusive evidence of a regime-led chemical attack remains elusive, the U.S. and its allies are said to be coordinating a military strike on the country.
The threat of an imminent strike receded Thursday after President Trump implied via Twitter that an attack may or may not be imminent. This allowed equity markets to recover from a sharp selloff earlier in the week. The S&P 500 Index, Dow Jones Industrial Average and Nasdaq Composite Index all rose during the week.
Against this backdrop, the case for owning commodities like gold have increased substantially, according to Goldman Sachs. The U.S. multinational investment firm has doubled down on its “overweight” recommendation for commodities, which includes aluminum, crude and other raw materials.
Gold briefly crossed $1,360 this week to settle at its highest level in two-and-a-half months. Crude oil also surged to more than three-year highs on Mideast tension.
The Week Ahead
With $75 billion flowing back into the crypto market, the question of sustainability is on everybody’s mind heading into the weekend. Crypto assets have failed to generate sustained rallies over the past two months, with the total market cracking $500 billion only once since the epic February crash.
Corporate earnings and military confrontation in Syria will also be on the agenda next week, as these factors could influence everything from equities to commodities.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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