The price of bitcoin, the world’s most valuable cryptocurrency today hit a six month high of $5000. The coin jumped 21 percent between 5:30 a.m. and 6:22 a.m. London time, reaching $5079. It subsequently shed those gains, and is currently trading at $4736.40 as at the time of writing.
On a year basis, the coin is however down. One year ago bitcoin was trading at $7,000.
Year to date however, the coin is up 27.7%
Same applies in Nigeria
A price chart from Luno, one of the popular bitcoin exchanges in Nigeria shows the price was largely flat at N1.5 million before spiking to N1.8 million, then dropping to its current price of N1.7 million per coin
Reason for the spike
Several analysts have attributed to spike to a false announcement that the United States Securities and Exchange Commission (SEC) had accepted a Bitcoin Exchange Traded Fund (ETF) application.
The commission has refused to approve bitcoin ETFs due to what it termed the risk of manipulation and liquidity issues. Over 10 applications for ETFs have been declined.
Losses are still heavy
While a 20% gain would be a decent return for regular financial assets, the recent rise provides no comfort to investors that have held over the last year. The cryptocurrency declined by 74% last year.
At this stage, investors interested in taking a position would be better off staying on the sidelines. There are no fundamental factors that would lead to a sustained uptick in price.
The entire industry is in a transition stage, with many cryptocurrency projects fallen by the wayside.
Investors already holding a position, and still significantly in profit may decide to maintain that.