Cryptocurrency update: Bitcoin eyes $50k

After a strong weekend, Bitcoin travels upwards. Could it really be ready to punch above the $50k level once more?

Cryptocurrency update

Bitcoin makes gains

Sometimes tracking Bitcoin undulations can be exhausting.

The token gained over 8% on Friday and continued on its upward path to scrape slightly above $48,000 over the weekend. Analysts are now putting the psychologically important $50k level as BTC’s new target.

But this IS Bitcoin we’re talking about here. Even when making gains it does still feel like a case of one step forward, two steps back. At the time of writing, Bitcoin was in the red, trading down 1% at $47,559.

Even so, Bitcoin has made solid gains across the end of September and into October. In fact, it’s still up 60% this year, despite major price swings and volatility.

There are a couple of reasons why Bitcoin could be on the up.

For starters, US Federal Reserve Chairman Jerome Powell said they have no plans to ban crypto transactions. This pro-digital finance move stands in stark contrast to China. Last week, the People’s Bank of China ruled cryptocurrency transactions were illegal, sending BTC down.

The Bitcoin hash rate, the rate at which new tokens are mined, is reaching all-time highs. This is a bit surprising as just five months ago China began to kick crypto miners out of the country. After this clampdown, the world was expecting the hash rate to fall dramatically.

Despite the hash rate and the computing power required to complete the complex algorithms required to mine new coins being basically unmeasurable, the overall trend is broadly upward.

CoinWarz recorded 201 exahashes per second (EH/s) on October 2^nd, while MiningPoolStats currently shows just 138 EH/s. At the highest estimates, the hash rate would be a full 32 exahashes higher than the previous peak.

Exahashes per second is the preferred metric analysts use to measure hash rate.

“China kicked out nearly 90% of bitcoin miners in the country earlier this year. Hash rate fell approximately 50% as a result,” Morgan Creek Digital co-founder Anthony Pompliano said, regarding the hash rate. “Only a few months later and we are almost back to an all-time high. Economic incentives drive further network decentralization.”

PlanB bets on Bitcoin bull run…

In response to the upward trend, Bitcoin showed across the last week, some of the more well known Twitter analysts are saying the best is yet to come.

PlanB, a favourite of the crypto Twitterati, says Bitcoin may hit $63,000 by the end of October before pushing on to a bumper $98,000 November close.

On-chain analyses finished tonight: IMO we are midway, no sign of weakness (red) yet. Note color overlay is not months to halving but an on-chain signal. My guess: this 2nd leg of the bull market will have at least 6 more months to go. pic.twitter.com/HAEMYfQ1pT

— PlanB (@100trillionUSD) October 2, 2021

PlanB is a pioneer of the “stock-to-flow” charting model. Stock-to-flow measures the current stock of an asset against the flow of new production or how much is mined in a year. A higher ratio indicates more scarcity, which in turn indicates a higher value.

…but South African hedge fund manager warns off crypto

It’s fair to say Bitcoin and cryptocurrency as a whole has had an equal share of champions and detractors.

While the likes of PlanB are putting all their chips on crypto, others remain unconvinced.

Jean-Pierre Verster, founder of South African hedge fund Protea Capital Management, has joined the chorus of those who believe digital tokens have “no intrinsic value”.

In an interview with Biznews, Verster said: “I think the technology of blockchain is a wonderful technology. And will find applications when it comes to having open ledgers – when it comes to transactions that you need to make sure are captured somewhere or recorded somewhere in a way that people can’t after the facts – fiddle with those recordings. For that blockchain is great.”

Even so, Verster was keen to point out that volatility is off-putting for some investors.

“It [crypto] has got these elements of a Ponzi scheme, which means that for a long period of time, prices go up, go up, and it looks like value increases, and then it all comes crashing down,” Verster said. “So, I have not invested in crypto myself.”

Apart from the government of China, there have been other major players that have called into question the validity of digital tokens as investment vehicles.

In May, Bank of England Governor Andrew Bailey called cryptocurrencies “dangerous”, and advised people only invest if they are prepared to lose all their money.