Bitcoin rose to $ 58,350 on Sunday and then fell to about $ 56,200 as of 2:30 p.m. in Tokyo on Monday. According to Nikolaos Panigirtzoglu, a strategist at JPMorgan Chase & Co., the token has roughly tripled in the past three months, but its liquidity has deteriorated.
“Bitcoin’s market liquidity is currently much lower than gold or the S&P 500, meaning that even small flows can have a big impact on the price,” he wrote in a note on Friday.
This background opens up the possibility of sharp movements up or down in the cryptocurrency, depending on the prevailing zeal for digital assets. Recently, even some of the token’s biggest sponsors seem surprised by its growth. In a recent tweet, Elon Musk said that prices in bitcoin seem to be high.
Bitcoin’s trading volume is about $ 10 billion a day in the spot and futures markets combined as compared to the equivalent figure of $ 100 billion for gold, Panigirtsoglu writes. This corresponds to “much lower liquidity in bitcoin than in gold,” he said.
Cryptocurrencies showed a good start to the year, leaving other assets behind a shadow curtain. Bitcoin proponents argue that corporate treasurers and institutional investors are new sources of demand and that the token can hedge risks such as higher inflation. Others see a prime example of the speculative epic fueled by hedge funds and day traders in the markets.
“Bitcoin seems immune to the barrage of fear, uncertainty, and doubt directed at the industry,” Paolo Ardoino wrote in an email.
Ethereum, the largest token after Bitcoin, also rose over the weekend, surpassing $ 2,000 for the first time on Saturday. It has grown by about 150% since the beginning of the year.
The material has been provided by InstaForex Company – www.instaforex.com