Bitcoin's Break Above $11,000 A Dead Cat Bounce?
As Bitcoin traded above $11,000 for the first time in 15 months, some experts are telling investors to be cautious.
The speed of Bitcoin's recent rally has some observers waving red flags. On Monday, Bitcoin surged as high as $11,251, a 13 percent gain from late Friday that put it at the highest levels since March last year.
«Don't get fooled by the dead-cat bounce this year,» said Whitney Tilson, founder of Empire Financial Research and a former hedge-fund manager, who was quoted in «South China Morning Post».
Driven By Big Boys, Shifting Perceptions
Three main drivers appear to be behind Bitcoin's recent surge: a more complex conversation surrounding bitcoin, fewer concerns about fraud, and a shift in the tense of how bitcoin is talked about from the past to the future, according to a study by Indexica, an alternative data provider.
Moreover, there are now signs of mainstream interest in cryptocurrencies and the underlying blockchain technology as compared to last year. In particular, Facebook’s Libra has gained a lot of attention as the social media giant is working with a broad group of partners from Visa to Uber Technologies to develop the system.
Volatility Ahead
The advent of Libra is validating the crypto space and sending all the major digital coins higher, noted Edward Moya, chief market strategist at Oanda in New York. «Bitcoin volatility is likely to persist, with US$12,000 and US$15,000 as the next two critical resistance levels,» said Moya.
«Mark my words: A year from now, it will be a lot lower. This is a techno-libertarian pump-and-dump scheme that will end in ruin,» added Tilson.
