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

Business day

 

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.

Deal book 300 x 250

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. 

 Buy/Sell/ Hold? 

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.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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