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Bitcoin has bounced above $5,000! Will it now take out $7,000?

Following the obliteration of key technical levels in recent days, Bitcoin really has the bit between its teeth right now.

Having reclaimed the $4,000 marker in late March and clung onto it in the subsequent days, many market commentators had been crossing their fingers that additional upwards movement could be expected with the cryptocurrency.

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Few were expecting the latest leg in its recovery story to be quite so sudden or seismic, though. In the space of an hour in dawn trading in the UK, Bitcoin gained $900 to breach the $5,000 barrier, this fresh upswing prompted by more serious chart-related buying. Prices have since settled back although the asset was still changing hands around $4,800.

Is $7,000 about to fall?

Could it be that all the negativity surrounding Bitcoin, a severe souring of market sentiment that saw the digital currency lose 80% of its value in the 13 months to December, has finally evaporated?

Well Nigel Green, founder and chief executive of independent financial advice provider deVere Group, certainly believes so. He said: “After being in bear territory there is a growing sense that Bitcoin is back… I’m now calling that the market has bottomed and the so-called crypto winter has come to an end.”

Indeed, Green is tipping the digital asset to take out further significant price milestones “over the next few weeks and months,” predicting more specifically that “we could reasonably see the Bitcoin price hitting $7,000 in the next few months.”

On the charge

Significant action on the charts may have propelled the digital currencies in Tuesday action, but there’s important fundamental factors that could lead to further gains in 2019.

In particular, investors in the asset class are eagerly awaiting signs that the US Securities and Exchange Commission (SEC) could finally be about to give the world’s first cryptocurrency-based ETF approval, a development that could accelerate adoption of this asset class among institutional investors.

Green predicted last year that cryptocurrencies are “on the verge of a true global breakout” due to the ‘FOMO’ (or ‘fear of missing out’) phenomenon, and that “there’s a growing sense amongst institutions that unless they embrace this sector, their competitors could move way out in front and they might find it difficult to catch up.”

He noted that major tech and retail companies, alongside those inside the financial sector, are increasingly wading into the cryptocurrency space. Any positive developments regarding SEC approval could prompt a tsunami of interest from more and more companies and propel prices even higher.

These are exciting times, sure. But I’m still not tempted to buy Bitcoin or its peers. If anything, today’s price surge has illustrated the extreme volatility that’s part-and-parcel of this speculative asset.

Further crushing price falls like those of 2018 could be just around the corner, and particularly should regulators keep turning their noses up and questions over the legitimacy of the digital currencies subsequently drag on. I believe there’s much better, and safer, ways to invest to get rich today.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.