All the Reasons why Bitcoin Price Breaks Above $4000, What’s Next?

Bitcoin prices have been on a roll ever since the fork completed on August 1 and the bitcoin network managed to survive through that phase. During this period, we have seen the bitcoin prices push through $3000, which had been a huge psychological bugbear on the prices and the bulls refused to stop there and continued to push the prices higher through the $3500 mark a couple of weeks back and they have since managed to push through the $4000 mark as well.

As of today, the prices trade above their all time highs as it aims for $4500 and higher in the short term. The seeds for this move were sown in the days leading up to August 1 which has to be marked down as an important day in the evolution of the bitcoin market. The fork happened on that day but the bitcoin network of traders and miners were busy much before that date preparing themselves for the technological challenges ahead.

Bitcoin Survives the Fork

It was an important phase for them as the bitcoin had been the poster boy of the cryptocurrency market, and continues to be so, and any large scale disruption in the services could have led to disastrous consequences for the market. The fork was initiated to make the bitcoin network larger than what is now and it also led to the split of the bitcoin market into bitcoins and bitcoin cash. There was panic in the markets in the lead up to the fork and many exhcnages and brokers had shut down trading as well. But August 1 passed off peacefully and the network got split into bitcoin and bitcoin cash and though some of the technological challenges remain, what it did show to the world in general and to the investors in specific, was the fact that the network was adaptable and it was willing to accept changes and grow with it. The fact that it handled the entire operation smoothly also increased the confidence of the traders and the investors about the sustainability of this model.

It is a measure of this confidence that we are seeing the prices move higher ever since the fork and it has been attracting more and more investors and traders ever since. Another crucial factor that should not be forgotten is the change in dynamics as far as how the investors view the bitcoin market nowadays. With the limited supply that is available, it is clear that main and overall trend is always likely to be up. This in itself is a very attractive proposition and the rise in prices over the last few days also shows that with the stock markets dipping, more and more traders are encouraged to invest in bitcoins in search of higher yields. Bitcoins seem to have gained acceptance as part of the portfolio of any large investor who is willing to buy bitcoin in times of high risk, as it has been globally over the last few days, in the hope that he would get better returns in bitcoin than in the stock market during the same time period.

Trading in bitcoin has seen a large increase in recent times, mainly from Asia with Japan, Korea and China contributing more than 50% of the overall bitcoin trading. We are also seeing more and more regulators sit up and take notice of the bitcoin market and push in reforms to regulate the market rather than to restrict it, which is a further endorsement of the bitcoin network.

Bitcoin Prices Push Through Historical Highs

It is a combination of the above factors that has been driving the bitcoin prices higher and higher over the last couple of weeks. The prices have broken through the all time highs around the $4225 region as of this writing and the next target for the bulls seems to be $4500. We believe that the region around $5000 is likely to present a much larger hurdle for the bulls in the near future mainly for its psychological value than for anything else.

Alternative Currencies

As far as the other cryptocurrencies are concerned, ethereum is the strongest contender for the top spot and it has been gaining relevance over the last few weeks as most of the ICOs are launched only with ETH as the base. This has helped it to gain recognition and acceptance and it has ridden well on this wave to move towards the $300 region over the last 2 weeks, up from the lows $200s. With the mining likely to get limited in the near future, ethereum prices also have a large potential to grow much higher in the medium term.

There are also many other cryptocurrencies that are doing well which include litecoin and monero though bitcoin cash seems to have fallen away ever since it broke away from bitcoin. What all this points to is that, the market is still in its maturing phase and likely to see a lot of other coins as well, with many falling by the wayside as time rolls on. Bitcoin is by far the poster boy of the cryptocurrency market and the happenings over the last couple of weeks has only reinforced this belief and faith. It has also helped to improve the overall faith in this market for the investors and traders who now realize bitcoins and other such currencies as a viable investment platform as they absorb that they are here to stay for the long term and that they would do better in embracing them rather than rejecting them.