The last week has been a good one for Bitcoin, with the price rising more than 10% according to CoinMarketCap data. Since the beginning of the month Bitcoin is up some 27%.
Following last week’s strong gains Bitcoin has been hovering under the $9,000 mark but has recently been under pressure due to tax-related selling ahead of the U.S. tax deadline last week.
The threat of increased regulation is still a dark cloud hanging over Bitcoin sentiment, however, with many fearful the U.S. Securities and Exchange Commission (SEC) is about to crack down on initial coin offering (ICO) issuers.
“Bitcoin’s price has shown resilience multiples times this year when it has dropped below $7k, even in the wake of negative events such as India’s recent ban on banks engaging in cryptocurrency-related activity, Mt Gox trustee sales, and tax-related selling,” said Garrick Hileman, cofounder of the cryptocurrency data and research firm Mosaic.io.
In March the trustee overseeing the bankruptcy of the defunct Mt. Gox cryptocurrency exchange denied being behind the 2018 sell off after it emerged he had sold $400 million of Mt. Gox’s Bitcoin since last September.
Meanwhile, one of the world’s biggest bitcoin exchanges, Coinbase, struck a deal allowing it to open a bank account with Britain’s Barclays.
Despite similar moves to make Bitcoin and other cryptocurrency trading more legitimate there have been as many set backs as advances.
In February British banks Lloyds and Virgin Money said they would ban credit card customers from buying cryptocurrencies.
However, Hileman expects the biggest regulatory hurdle this year for Bitcoin is still to come.
“The regulatory shoe that everyone is waiting to see drop is definitive guidance from the SEC on whether a significant number of crypto tokens are securities and have been sold through illegal ICOs,” Hileman said. “It has been rumoured that this guidance is coming soon. It is unclear which way the SEC will rule, and there is a real risk that the crypto market sells-off if an adverse ruling is delivered.”
The Bitcoin price surged above $19,000 in December last year, a gain of 2,000% on its December 2016 price but has since lost roughly two-thirds of its value given worries about regulatory crackdowns.
“Over the past few months, Bitcoin has lost nearly three quarters of it’s value and finally reached a level more in line with it’s long-term trend. Now traders are seeing a lot of value across the board and starting to get back in. The market may have slumped this year, but crypto technologies have quietly continued to improve in the background. Bitcoin Cash (the popular Bitcoin alternative) has already more than doubled in price this month,” said Glen Goodman, Bitcoin analyst and author of forthcoming book The Crypto Trader.
I think it’s still a bit early to declare the dawn of a new bull market, but we’re seeing more optimism in the crypto community than we’ve seen in months.”
Meanwhile, many expect increased regulation — as long as it’s the right kind of regulation — and a wider user based to mean less volatility for Bitcoin and other cryptocurrencies.
“A more affable attitude from regulators is on the cards as cryptocurrency is being looked at in terms of what it can do,” said Charles Hayter founder, and CEO of the cryptocurrency data analysis firm Crypto Compare. “The price is specifically sensitive to herd behaviour in its nascent form but in the long term will see volatility decline.”
According to Coinmap.org — a site which records merchants who accept cryptocurrencies — there are now over 12,000 business taking Bitcoin and other coins as payment, with much of that growth coming from east Asia and emerging markets.
“The end of result of having new entrants into the system last year is more users. More users means more demand to use Bitcoin and other coins and therefore more merchants adopting it,” Hayter added.