The 2018 New Year’s Crash
We don’t need to tell anyone here why 2017 was a wild year in Bitcoin in the cryptocurrency market as a whole. It had a few notable dips here and there.
But 2018 decided to splash a bucket of cold water on anyone who wasn’t paying attention.
The market peaked in the middle of December, with Bitcoin just kissing $20000, and the entire crypto markets were looking at a total value of nearly $800 billion. In case the significance of this is lost on anyone, keep in mind that this is more than 20x what it had been trading for a year earlier — in late December 2016, the king of cryptos was just nibbling its way to $1000 again, and the overall crypto industry was barely cracking $15 billion.
But no bull run lasts forever, and the bears weren’t in a hibernating mood.
The initial stretch to 20k didn’t last long, but it looked as though things were stabilizing in the $15000 range as the year came to a close.
Furthermore, the Korean markets were going wild, defying all odds as their premiums broke through 50%. At a certain point, Koreans were paying a staggering 32 million KRW per Bitcoin — that’s over 30000 in USD.
But the mania had to end at one point. As adventurous opportunists rushed to take advantage of the arbitrage opportunities, worldwide enthusiasm began to wane.
The age-old meme of “China bans Bitcoin” began to shift toward the Land of the Morning Calm, as various statements from Korean Ministers were either mistranslated or blown out of proportion.
On top of this, growing skepticism of Tether’s influence on crypto prices and the legitimacy of Bitfinex’s volumes caused more investors and traders to express caution about Bitcoin’s foundation in the 5 digit range.
Early January saw a steady trickle down in price, along with a gut-wrenching drop to $10000 on January 15th. The next two weeks saw the position holding at around the $11000’s. But by the time February rolled around, freefall resumed.
Support level after support level collapsed under the weight of the crash. Firm footing was found just above 6000, and the worst of it was over.
While the worst of it appears to be over, and volatility is leveling out between $9000 and $11000, this constitutes one of the worst crashes in Bitcoin history. Depending on which exchange you go by, this was a massive 70% drop.
Now, the hodlers and other experienced types are probably putting on smug faces — after all, this is by no means a record-setter in terms of percentage.
At the same time, 2017 saw a huge growth of mainstream interest, and the ecosystem welcomed a large chunk of newcomers, especially during the final few months. As such, this is the biggest crash by far in terms of volume and market capitalization, and the breadth of effect: several fortunes were made and lost in the altcoin scene alone.
To the newcomers, we offer our sympathies — not a trader exists that hasn’t been burned at least once in their career. But don’t lick your wounds too long. Bitcoin might be down, but it’s not out, and well…in the unregulated digital wild west, you’ll have to expect this sort of thing.
As we continue to grind here looking for a bottom, it seems that on a technical basis 8–9k levels would offer considerable support. That being said, the bulls will need to muster significant momentum to ensure a sustained breakout of the current range of 10–11k.
We are currently two and a half months since the December peak and still quite a bit of uncertainty exists. The month of March will be a critical time to determine bitcoin’s trajectory going forward over the next several months.
For those that believe a retrace is likely taking a long position on XRayTrade with the XBTM18 contract would be the way to go. Alternatively if you’re expecting bearish conditions ahead then a short trade on either XBTUSD or XBTH18 would be a fair bet.
The good news is that while the markets is turbulent…the foundational work on the protocol layer marches forward. There have been zero technical breaches, and January also saw the birth of lightning network on mainnet, and other fundamental research emerging that might help Bitcoin scale to the masses.
Long story short: the future remains bright.
