The first week of July seemed to echo an all year turn around in the cryptocurrency market, bitcoin was leading the way, slowly but firmly making its way towards the $7,000 mark. On the eve of the month of July, bitcoin was at just above $6,300 but by the 2nd of July, it had hit over $6,600.
A price increase that no one saw coming but that was welcomed by its investors. It seemed that everything about the cryptocurrency’s fall was turning around as bitcoin’s gains dragged up most of its virtual cousins, many experts who predicted that prices would rally were finally patting themselves in the back. The second half of the year was finally going to be bullish for the crypto community.
However, on the 3rd, prices went down and for the next 24 hours danced around the $6,500 mark. Come Wednesday, the prices rallied again and went up to just over $6,700 and the whole crypto community was praying to the gods that this would be it.
The final race that would drive the price all the way to the $7K mark, but again the victory was short-lived, prices dragged out to $6,600 again, this time sticking there for the next few days. Sunday, July 08 2018, the prices unprecedently shot up again, this time going to just over $6,800, victory was finally in sight.
It was for sure that this time bitcoin would rally all the way to the $7,000 mark, the mark that would see bitcoin finally become stable, shedding off its volatile character.
In the wake of the 9th July, the Monday blues had caught on and bitcoin was down to just above $6,300. So, a week was gone, bitcoin had rallied from almost the same price, been up and down the mark but ended back in the same price range that it had started.
So, why is the $7K Mark Important?
Mining has always played a major role in the crypto market and not only does it dictate the number of coins in the market, but it has also previously dictated their prices. Historically, bitcoin has traded 2.5 times its mining cost.
So, how much does it cost right now to mine? Currently, fully loaded, mining costs are around $7K, which means anyone mining right now is either losing money or barely making any.
It is for this reason that miners are always moving around the globe looking for friendly and cheaper locations, it has also been the cause of the reported mining equipment prices going down by 20% in July due to low demand. So, in a practical world, no miner wants to lose money and for this reason alone, bitcoin needs to be at least $7K.
So, before bitcoin can go for the $20,000 to $25,000 mark that experts like Tom Lee still see it achieving by the end of the year, they have to still be in ‘production’. Once the miners are kept in the game, we can ensure the continuity of the rally.
Once the $7K mark is reached, prices will rally all the way to $10K. According to financial analyst Max Kesier, this will be triggered by a rising demand driven by the fear not to be left out if the prices rallies to as high as $20,000, as it did in 2017.
Now investors know of its potential and all their waiting for is a trigger so that they can get in on the action. Additionally, because of government regulations that have been introduced in many countries, bitcoin and other cryptocurrencies have become a commodity that can be trusted by large scale institutional investors, many of which can pour in millions of dollars and change the market prices in hours.
The newly introduced regulations have encouraged new investors to trust in the market as they believe the regulations will provide security over their invested money.
Lastly, unlike back in 2017 when trading volumes were low and very little people knew about cryptocurrencies, now there are more players in the board and a single trigger towards a positive momentum could see a rally like never before.
Many people are looking to invest into the market but unfortunately for a long time the market has been shedding billions which has made it look like a risky business.
However, any positive move could trigger a rally and a momentum that will see new investors and even old ones re-invest into the market. The $7K mark really seems to hold the key to the virtually promised land.