A look back on the cryptocurrency market in 2018
A year-end review of the significant trends of Bitcoin
In 2018, we saw one of the major historical corrections in the prices of Bitcoin (BTC). During the bitcoin bull run in 2017, the altcoins market boomed, and in 2018, it doomed because of the downtrend. This trend proved that all altcoins are tightly coupled with Bitcoin’s tendencies. So, in this article, we are going to focus mainly on the key events and the developments that happened with the coin in the previous year.
The September 2015-December 2017 bull run took bitcoin from 200 USD to 20,000 USD which lead to the parabolic price formation as shown in the following chart:
Till now, the bitcoin price has dropped down by as much as 85% from the all-time high, and the overall market capitalization is down by more than 87% from an all-time high of 800 Billion USD.
Market corrections are a part of the market lifecycle and are required to bring prices to stable zones when prices make parabolic moves. Such type of corrections has happened multiple times in the past. Have a look at the table given below for further details:
Note: BTC prices vary significantly in different exchanges.
The recent price correction has led many investors to lose their faith in the potential of cryptocurrencies as an investment. However, there are many reasons for traders to hold on to their funds and wait for another parabolic move. Let’s discuss those technical and fundamental reasons in detail.
Improved scalability and reduction in network transaction fees:
In the current times, “Transaction batching” is used by many cryptocurrency exchanges. In this method instead of processing bitcoin transaction as individual transactions, exchanges wait until they receive a large number of transaction requests. When the number of transaction requests reaches a pre-defined threshold value, all those transactions are grouped into a single transaction and are processed. This is the reason why some exchanges tell us to submit the transaction request before a pre-defined time to process it in the batch for the next day.
The “Lightning network” which is designed to reduce network congestion and fees is expected to have a huge impact in the coming days. One good example of the high efficiency of the lightning network is “Satoshi’s Place”, where people paint pixels using Lightning. At its peak, there were over 1000 transactions that were made per day in this service, with little fees and they caused minimal congestion on the Bitcoin blockchain. The capacity of the Bitcoin Lightning Network has surpassed $2 million on Sunday, Dec. 23, according to the data provided by BTC statistics website, bitcoinvisuals.com.
The rise in the number of Bitcoin ATMs in the world:
In spite of the major price correction, the number of bitcoin ATMs is rising in the world. The statistics in the chart depict the number of Bitcoin ATMs worldwide from January 2016 to December 2018. There were 4,036 Bitcoin ATMs globally as of December 2018.
There have been positive developments as far as the regulations are concerned. The G20 nations have signed a joint declaration which states “we will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards and we will consider other responses as needed”. We are entering a new era of regulated cryptocurrency exchanges, and at the same time, we are witnessing the arrival of bitcoin-based securities. The trend started with the GBTC Bitcoin Investment Trust and then came the ETN Bitcoin Tracker One (Nasdaq) and bitcoin futures at CME and CBOE. The American stock exchange also plans to pursue bitcoin Futures during the Q1 2019. Bringing in a new future for digital assets, the Intercontinental Exchange (ICE), owner of the well-known New York Stock Exchange (NYSE) and other such traditional exchanges have come forth to reveal their collaboration with Starbucks, Microsoft and other major players in the market on their new crypto-centric platform called Bakkt.
Technical analysis as per monthly timeframe:
Bitcoin (BTC) is currently trading at 3714 USD (as of 26 December 2018, 20.35 IST) with the fall of 1.94 % in last 24 hours. As per monthly time frame, BTC has entered into the second phase of a bear market after 8–9 months of consolidation on 5800–6000 USD strong support zone. Technically, BTC has weak support zones at 2000 USD, 2500 USD, 3000 USD and strong support zone near 1000–1300 USD. It has broken a long-term uptrend line with a high volume “Bearish Marubozu” candle pattern which indicates a continuation of a major bear market phase. BTC is expected to bounce and begin another historical bull run from 1000 USD level and climb to a new all-time high. 1000 USD is also a good psychological support level. Expected target zone of next bull run is 30,000–50,000 USD.
Stay tuned for interesting and valuable market insight nuggets next week!
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