After an extremely volatile end of the year, Bitcoin prices stabilized between the mid to high $3,000 range. It is as if Bitcoin finally found firm support above $3,500. And even though it failed to break out of the $4,200 resistance line, it didn’t plunge to its previous lows of $3,200. This is an indication that the turmoil created by the failure of dozens of ICOs, start-ups, and miners is clearing the space of deadweight. In fact, the crypto space appears to be strengthening with a clearer focus, continued interest, and investment. However, despite all the positive developments providing buoyancy, the lack of volume creates the risk of another price drop.
Institutional attention now lays with the potential lateral market emerging from Security Token Offerings (STOs). Two days ago Nasdaq, Galaxy Digital, Citi, and others rasied $20 million for Symbiont.io, inc. They plan to form a new STO trading platform. This is in addition to the $130 million raised by TZero also backed by Galaxy Digital, and $15 million raised by SeedX in a similar venture.
Retail investor’s interest in ICOs also remains strong as shown by approximatley $3 billion currently parked in stablecoins. Investors are likely waiting for regulatory clarity before re-enteting the market. Furthermore, the upcoming Bakkt exchange raised $182 million in December and is on track to launch sometime in Q1 2019. In addition, there are many encouraging signs from U.S. legislators regarding the passage of crypto-friendly laws. Many state proposals seek to exempt crypto from securities laws.
There are two reasons why another price drop is possible in the near future. One, technical analysis show the formation of an inverse triangle that is indicative of bearish trends and sideways trading. The problem is that similar conditions existed in the latter months of 2018. And the result was a 30% drop in prices. Therefore, if this price stability lingers with no clear breakout, it is likely prices may drop like they did last November. Two, the CBOE VanEck withdrew their Bitcoin ETF application with the SEC citing the government shutdown as the main reason. But, the fact that that the news did not have an immediate effect on prices does not mean it can’t have one later. For example, if STOs fail to take hold, the market will have very little to look forward to. So, it may drop decisively.
Crypto appears to be resting on a plateau formed by advances in project development, investor capital, and the formation of a securities token market. Projects like Hyperledger, Lighting Network, the NEM blockchain, Brave browser, Tron’s BTT, and others maintain adoption a viable prospect. The panic sell-off subsided and holders are hopeful that institutional investors will save the day. Unfortunately, as long as prices remain still, another drop is still very possible.