Last week our theme was “Bullish Signals during the Blockchain Bear Market.”
Our theme for this week is “Bitcoin Bulls & Bears have a very noisy party & bring back that famous volatility.“
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This has been a rough week for the entire cryptocurrency market. A few days ago, Bitcoin hit its lowest this year, dropping as low as $5,244, before bouncing back to the $5,500 mark.
The voice of uncertainty has rekindled the fear and doubt, and rumors have been surfaced that Bitcoin will hit $2,000 – $3,000, before the bloodbath is over. The price drop forced many retail investors and long term hodlers, to give up their positions. The $6,000 level has been considered to be Bitcoin’s floor. This week’s drop below that threshold, raised concerns about the viability the most popular cryptocurrency.
Other crypto markets also suffered huge losses, with all major cryptocurrencies showing double-digit losses. Ethereum (ETH) dropped as much as 13% and Ripple (XRP) by 15%. Bitcoin’s market cap has fallen below $100 billion for the first time since October 2017. The entire market declined from a total value of $210 billion to almost $180 billion.
Yet, Circuit Capital Index shows that adoption is rising, even though the price hasn’t. According to an article in Forbes, the founders of Circuit Capital, a new San Francisco-based cryptocurrency hedge fund, believe that the poor performance of digital asset prices during 2018 has made difficult to observe the ever-rising interest in the cryptocurrencies, by consumers and investors. Circuit has developed an index that measures mainstream adoption of the blockchain, the technology behind digital assets. The index shows crypto adoption is on an upward trend, even though prices have been heading in the exact opposite direction.
Another story this past week that’s been on everyone’s radar has been the Bitcoin Cash (BCH) hard fork. The fourth-largest cryptocurrency split on Thursday, November 15, 2018. Bitcoin Cash split into two different coins, “Bitcoin Cash ABC” (BCH ABC) and “Bitcoin Cash SV” (BCH SV). So far, the Bitcoin Cash ABC chain has more accumulated proof of work, and its native currency, BCH ABC, and is trading higher on exchanges. The Bitcoin Cash ABC camp feel they’ve won, though Bitcoin Cash SV has not yet conceded.
While the hard fork caused prices of the forked coins to fluctuate, many think that it also caused Bitcoin (BTC) to plummet to its lowest price this year, after several months of relative stability. As things develop. we’ll see if it will continue to drive the price of BTC even lower.
The last 10 months, it’s been a big party for the bears. But has the time come for the bears to hibernate, and for the next bull stampede to start?
The biggest hope for the next bull run is institutional money. But for institutional traders to directly access crypto, they need to be able to trade, settle and store assets in an institutional-grade environment.
I think we are near the end of the tunnel. But a few things need to happen , before we see the market swing upward.
What still remains in play for the bulls, is the hope for the SEC’s upcoming decision to finally approve a Bitcoin ETF, set for December 29. This would open up Bitcoin to institutional traders, and give it an air of legitimacy.
And it’s not just the SEC’s Bitcoin ETF approval that everybody is anxiously awaiting. Bakkt, the big endorsement by the owners of the NYSE, could boost Bitcoin and the entire cryptocurrency market in 2019. Bakkt plans to make Bitcoin a secure offering for financial institutions, and open it’s accessibility in mutual funds, 401K’s and other pension funds. This would pave the way for widespread adoption of crypto-backed debit cards and crypto-based retail payments, with the eventual replacement of credit cards with Bitcoin.
I am excited for 2019 and the direction of the market, with all the positive developments and regulatory clarity underway. While we don’t know where the market will bottom out, we should consider that the bear market may last a little longer than expected.
If you are truly bullish about crypto and blockchain, the current prices are irrelevant. Bitcoin’s true nature is as an instant way to pay for things anywhere in the world, its not about money. We could see a cashless world sooner than we imagine. Bitcoin and the ideas it represents are here to stay. As the number of people using it increases, it will eventually spread exponentially just like the Internet.
Bitcoin’s price volatility will stabilize as everything develops, but for now we should prepare for the worst, while we work to build the best.