The split crisis has subsided; reflecting on the price movement up to now
Nice to meet you. My name is Saiō Kawada, and I am engaged in currency trading at Traders Securities.
Starting this month, at FX-On, I will be responsible for BTC market reports.
Now, without delay, let's look ahead to future market prospects.
■Reviewing July Market
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Since the enactment of the amended Financial Instruments and Exchange Act in April, BTC entered a rapid uptrend, approaching 340,000 yen, but in early July it entered a correction phase with reduced volatility. As midsummer approached, BTC suddenly plunged, testing a bottom again during the three-day weekend around Marine Day.
Although many traders expected the support line to hold higher due to the mild price movement in the first half, the sharp drop in this month seemed to catch them off-guard, causing continued selling with stop-loss triggers. From around 86,000 yen near the beginning of the year, it fell to about 205,000-210,000 yen after roughly a 50% retracement. However, from July 17, it reversed into an uptrend, reaching the 345,000 yen level and updating the high.
Though there was a slight pullback after taking profits, BTC is currently trading around 300,000-320,000 yen.
Looking at exchange price movement, the recent drop was driven by short entries in margin trading where prices in margin trading fell ahead of spot prices, and speculative funds that held long positions up to June rushed to short. The drop was a dramatic market move that reminded us again of BTC’s volatility, and given that the BTC split risk was already recognized by market participants before the decline, this drop may have been driven by market sentiment rather than fundamental changes.
■ BTC Still Appears Undervalued
During the recent drop, some commentators questioned BTC's growth potential and predicted price crashes, but in my view it is premature. I will address this in future issues, but for now I believe BTC’s rise is not primarily driven by technical innovations or updates, but by regulatory reform and broader adoption increasing the number of BTC holders.
Indeed, while the share of individual investors in Japan and the U.S. who invest in cryptocurrencies remains around 3% (Monex Group survey), the percentages who say they are interested but have not yet invested are 35% in Japan and 24% in the U.S. (same survey). There is still ample room for growth. With governments, including in emerging markets, beginning to promote digital currencies and institutions mostly not investing yet, investing in BTC today can be viewed as in its early stages.
Having survived the BTC split crisis without issue, in the medium to long term we may see a more positive attitude toward the self-governing capabilities of the cryptocurrency community under a decentralized system.
■ Developments from August Onward
For the reasons above, I believe BTC will move toward another uptrend.
Since last year, after rising and undergoing a two-month correction, BTC has shown a pattern of attempting new highs again. I anticipate it will again challenge the high around 340,000 yen reached on May 25.
Cryptocurrency Exchange / Minna no Bitcoin
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【Author】
Saiō Kawada
Trading Desk, Market Department, Traders Securities
Born in Geneva, Switzerland. Graduated from Keio University.
Having traveled to many countries, his phenomenological analysis grounded in real experience is persuasive.
Utilizing behavioral economics learned in college, he analyzes psychological biases of market participants theoretically and applies them to trading.
Hobby: Shogi; as a rated amateur, his midgame maneuvers are used to read the next move in the market as well.
His credo is: “The masses are always wrong.”
【Disclaimer】
The Bitcoin market information and other content provided on this site reflect the writer’s personal views and do not constitute any guarantee of accuracy or safety by the author, Traders Securities Co., Ltd., or our company. The information is intended to be a reference and does not constitute investment advice or recommendations for specific investment actions or strategies. Final investment decisions should be made by the reader. Please note that any gains or losses from investments belong to the investors themselves. We, the author and Traders Securities Co., Ltd., are not liable for any damages arising from reliance on this information.
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