Bitcoin has recouped some of Wednesday's double-digit losses on Thursday. A single bitcoin changed hands at $6,469.69, up 2.4% since Wednesday at 5 p.m. Eastern Time on the Kraken cryptocurrency exchange. Altcoins or digital coins also made up for some of the recent losses. Bitcoin Cash is trading 2.4% higher at $605.60, Ether has regained 1.4% to $362.73 and Litecoin is up 1% to $63.43.
Some say that the Securities and Exchange Commissions' delay to decide on a proposed first-ever crypto-related exchange-traded fund is resulting in frantic trading sessions. However, the agency might just be taking time to protect investors and promote market integrity. Needless to say, they are quite comfortable with the idea of the product launch.
But what's behind the digit-asset price frenzy then? Market pundits note that the lack of pricing information in the cryptocurrency market leaves coins vulnerable to wild fluctuations driven by a single entity, known as bitcoin whales. Thejas Nalval and Kevin Lu, the directors of Element Digital Asset Management, added that "unlike other mature asset classes that have very metrics based fair value models that tend not deviate much from one another, the concept of fair value with bitcoin can have a huge variance."
Technical Outlook for Bitcoin Bleak
Over the past few trading sessions, bitcoin has been losing ground. Thus, it's not a surprise that the digital currency bounced back given how oversold it had become on a Relative Strength Index basis, a momentum indicator that measures the speed and change of price movements.
Bitcoin, however, has time and again failed to sustain its momentum. Lest we forget, after an early summer rally, bitcoin failed to break above its 200-day moving average, another closely watched momentum indicator, on Jul 24. Then on, it witnessed a sharp decline resulting in 10 losing trading sessions out of 11. Thus, it can be safely concluded that even though this time bitcoin went past the coveted $6,000 mark, maintaining such a level is an uphill task. So, the gains are expected to be limited.
GPU Makers Hang in the Balance
In order to create server farms to attain bitcoin and other cryptocurrencies, bitcoin miners snap up graphics processing units (GPS). This, in turn, should benefit prominent GPU makers such as Nvidia Corporation NVDA , Intel INTC , Micron MU , Hewlett Packard HPE and Advanced Micro Devices AMD , to name a few.
But, GPU makers' party hasn't started yet. The limited upside potential in bitcoin price is a dampener for chipmakers that make GPUs for the mining of cryptocurrencies, including bitcoin. In fact, AMD has reported a decline in GPU sales during the second quarter.
AMD's latest quarterly earnings report stated that "computing and graphics segment revenue was $1.09 billion, up 64% year-over-year and down 3% quarter-over-quarter. Year-over-year revenue growth was driven by strong sales of Radeon products and continued growth of Ryzen products. The quarter-over-quarter decline was primarily related to lower revenue from GPU products in the blockchain market."
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.