Bitcoin soared above $10,000 early on Saturday for the first time in 15 months.
Dubai - However, strong volumes and large transaction figures point towards potential push upwards by end-2019
The cryptocurrency industry's leader, Bitcoin, has been on an upward journey this year, gaining a massive 188.62 per cent year-to-date. But the road looks uncertain for cryptocurrencies in the second half of the year as some analysts see Bitcoin overvalued while others think that digital currencies still have the firepower to go up further.
M.R. Raghu, managing director of Marmore Mena Intelligence, says Bitcoin has seen a gain of over 188.62 per cent from the start of 2019 without any major retracements.
Hence, it has been overvalued. He suggested that Bitcoin can retract to $6,000-$6,500 once its present upward trend is over.
"However, strong volumes and large transaction figures seen in the market point towards a potential push upwards by the end of 2019. The correlation between Bitcoin and other cryptocurrencies is still very strong and the market as a whole is expected to follow the trend set by Bitcoin," said Raghu.
Naeem Aslam, chief market analyst at TF Global Markets, says clearly the trend is to the upside and the momentum is here to stay.
"The worst scenario is for consolidation and the best-case scenario is that we may start to move towards the $15,000 mark. The near-term support is $5,248 and this is where the 200-day moving average is trading," he said.
Bitcoin soared above $10,000 early on Saturday for the first time in 15 months, the highest level since March 8, 2018. It has gained over 26 per cent month-to-date.
The Gemini crypto exchange and Bitcoin billionaire Tyler Winklevoss had last week predicted that if Bitcoin broke through $10,000 barrier, the next logical price would be $15,000.
The launch of Facebook's cryptocurrency Libra is seen as a watershed moment for the company and digital currencies. It enjoys backing of some other major players, including Visa and PayPal, and support from eBay, Uber and Spotify. This indicates that Libra might eventually be accepted as payment solution on their companies' platforms as well.
Arshad Khan, co-founder and CEO of Arabian Bourse, said crypto assets are gaining mainstream attention now as several financial institutions have either already started using these crypto assets for cross border remittances or they are under implementation stage.
"This is a significant use case of crypto assets amongst many others. Similarly, crypto assets are now being more conveniently and efficiently used for e-commerce and retail transactions. This is a very encouraging start and such developments would further integrate the traditional assets with the crypto assets," Khan said.
On the factors that will influence crypto in the second half of 2019, Aslam said there is a need to see more positive news and perhaps an approval of exchange-traded funds and more enterprises jumping in this space.
Raghu says technological improvements are underway, which can help solve various issues with adoption that the market currently faces. "The Bitcoin Lightning network protocol has seen major improvements with adoption making all-time highs. Ethereum is planning to launch its proof-of-stake consensus upgrade by the end of 2019, which will help solve the problems of scaling on the network," he added.
Raghu says the approval of the widely-awaited Bitcoin ETFs is something that can help bring institutional investors into the market and boost prices further.
"Moreover, positive regulatory outlook towards cryptocurrencies by a major economy can also boost adoption," he said, adding that the launch of Libra by Facebook has helped legitimise the space of decentralised currency and can help bring the additional media attention and interest towards cryptocurrencies.
Khan believes that going forward, regulatory and transparency will play a very important in the development of this sector.
"Having the right regulations will ensure organic growth of the markets and its ecosystem. Several regulatory bodies around the globe are now stepping forward and putting in place regulatory framework required for all-inclusive development of this industry," Khan added.
With the UAE leading in this field, Raghu says the country can attract capital from all over the world due to its crypto-friendly framework, thanks to initiatives taken by Abu Dhabi Global Market and the Dubai Multi Commodities Centre.
"With clearly-defined regulations, the UAE can help introduce guidelines for the use of decentralised cryptocurrencies, which can act as a blueprint for other countries around the world considering its adoption," he added.
Aslam says the government needs to appreciate the technology but also keep a tight leash on the wild, wild West, so they need to support good projects and define their red lines.