The crash of bitcoin may happen sooner or later after a certain ‘incredible’ mark, before it continues to surge in the long run
by AFIQ AZIZ / pic by BLOOMBERG
THE rally in bitcoin to a fresh high of US$23,000 (RM92,800) yesterday can continue, driven by fresh money coming into the cryptocurrency, analysts said.
At the time of writing, bitcoin was trading at US$23,586, according to data by Coinmarketcap.com, fuelling excitement among holders and investors.
In terms of market capitalisation, bitcoin is now valued at US$421.65 billion, 42% higher than US$296.3 billion recorded in December 2017.
“As we have seen before, bitcoin thrives on hype, and a break above US$20,000 will undoubtedly bring this. Already, we have seen a major acceleration in the rally and I see no reason why it won’t continue,” Oanda Corp senior market analyst Craig Erlam told The Malaysian Reserve (TMR).
“It is a highly speculative instrument that is extremely difficult, if not impossible, to value.
“That makes it a very interesting follow, but rallies like this make it extremely vulnerable to a crash, as we saw a few years ago,” he cautioned.
Bitcoin had reached an all-time high of US$19,700 in 2017, but it had since “crashed” and “died” many times. By hitting above the US$23,000 mark, bitcoin has traded higher than what many investors have been forecasting.
Erlam added that a price correction may happen before it continues to surge in the long run.
“Would anyone be surprised if it hits US$30,000 before the end of the year? They shouldn’t be. It doesn’t mean it’s justified, but since when does that hold it back?” he said.
“This is very much a house of cards situation; there’s nothing healthy about what we’re seeing right now and it will come crashing down.
“It’s just a case of when, rather than if. There could be plenty more fun before the party stops.” he said. Tokenize Technology (M) Sdn Bhd CEO and CTO Hong Qi Yu said it is still very hard to predict where the currency will settle in the next couple of months.
“Upon bitcoin reaching a new resistance and becoming stagnant for a few days, I believe the alternative coin (besides bitcoin) season will start. Coins like ethereum may revisit their old-time high too,” he told TMR.
Industry players feel bitcoin will continue to have a strong footing, given many important things have happened since the past two years.
Major companies like PayPal and Square have started offering cryptocurrencies which may create future demand for the currency.
Paypal’s move to allow the usage of cryptocurrency on its platform has been attributed to bitcoin’s meteoric rise on Oct 21.
Bitcoin — while being volatile — has withstood multiple bubbles and never bottomed out at US$0.
In Malaysia, the industry estimates that only 1% to 2% of the whole 30 million population or 600,000 individuals have knowledge of cryptocurrency.
Luno Malaysia Sdn Bhd — one of the digital asset exchanges (DAXs) — recently announced it is dominating the market with some 180,000 customers registered on its platform.
Luno Malaysia country manager Aaron Tang said this comprised 90% of the total customers who registered under licensed DAXs in Malaysia. Other two platforms are Sinegy Technologies (M) Sdn Bhd and Tokenize Technology.
A medical practitioner in Besut, Terengganu, Dr Rosely Omar said he still holds some digital coins, which he believes will surge according to the demands.
“I have sold some bitcoins when it surged in 2017 and still hold some. I believe it has the potential to surge to higher levels,” he told TMR.
In 2019, Dr Rosely also accepted bitcoin as a payment for his services, but has stopped after the government prohibited the currency as a legal tender.