History shows this week’s bitcoin rally could be fleeting1 min read . Updated: 20 Dec 2018, 08:20 PM IST
The momentum that saw bitcoin soar from under $1 to almost $20,000 between 2011 and the end of last year is gone and unlikely to return
London: This week’s more than 25 percent rally in Bitcoin is impressive, but it doesn’t signal a return to its erstwhile boom years, if its price history is a guide.
The momentum that saw it soar from under $1 to almost $20,000 between 2011 and the end of last year is gone and unlikely to return, according to traders and analysts who look to chart patterns for clues on price direction. That’s because a key uptrend on its logarithmic chart failed, they said.
Even crypto bulls, like Charlie Morris, a fund manager at Atlantic House Ltd. which manages $1 billion in assets, are skeptical that the future is as bright as the past. Having been active in the market since 2013, he said gains are likely to now be more modest in the wake of this year’s more than 70 percent decline.
“That trend has been a great ride, but it is broken," Morris said in a letter to investors. “The long-term chart tells you to prepare for lower rates of return."
Parallels could be drawn between the demise of last year’s bubble and the end of the dot-com boom of the 1990s, according to Paul Day, a technical analyst and head of futures and options at Market Securities Dubai Ltd. The Nasdaq Composite Index then also plunged almost 80 percent. When it finally recovered to its pre-crash highs more than 15 years later, many of the early stars were no longer around.
“If, and it’s a big if, crypto survives and the winners become viable mediums of exchange in the years ahead, there is nothing to say the winners have even been created yet," he said by email.
This story has been published from a wire agency feed without modifications to the text.