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Bitcoin Investors: Expect Wild Fluctuations in 2018

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2018 is expected to be another wild year for bitcoin, according to one analyst, who foresees huge fluctuations in the world’s leading cryptocurrency.

Volatility Continues

The value of bitcoin is in for a wild ride next year, according to Nick Colas, Wall Street analyst and co-founder of DataTrek. In a recent interview with CNBC. Colas argued that the digital currency over the next 12 months could fluctuate between $6,500 and $22,000, with the midpoint likely coming in at around $14,035. The midpoint  represents a more than 10% drop from Wednesday’s level.

“Bottom line: bitcoin can rally to $22,000 and still be reasonably priced, or plummet to $6,500 and also be correctly valued,” he said. “We expect to see bitcoin trade for both prices in 2018.”

When it comes to evaluating bitcoin’s true value, he added:

“Bitcoin and cryptocurrency are hard to value and their economic utility relies on use cases that are not yet built. Of course the volatility we’ve seen will continue.”

In addition to huge fluctuations, Colas envisions four market “crashes,” which he describes as a price drop of 40% or more.

Bitcoin posted a string of record gains through December before a sharp correction erased thousands from its value. At press time, the value of a single token was $15,397, according to the CCN price index. The digital currency traded as high as $16,521 earlier in the day.

Earlier this month, bitcoin’s market cap rose above $300 billion. All the major altcoins came along for the ride, with the total market cap for all cryptocurrencies peaking near $650 billion. The total market cap has since moderated to around $598 billion, according to CoinMarketCap.

Institutional Demand No Guarantee of Price Stability

Colas’ prediction is even more compelling when we consider the influx of institutional capital into the bitcoin arena. Although the recent launch of bitcoin futures on the CBOE and CME exchanges has been heralded as a watershed moment for cryptocurrency, it is no guarantee of success, and it is certainly no guarantee that prices will become more stable.

As Hacked reported last week, institutional investment presents somewhat of a conundrum because nobody knows how the so-called ‘bitcoin billionaires’ – those who control large swathes of the market – will react. As it currently stands, 1,000 investors hold about 40% of all bitcoin in circulation for an average of $350 million per head.

It remains to be seen whether traditional investment vehicles like futures contracts will compel these holders to reduce their stake in the digital currency in exchange for cash. If this were to happen, a certain percentage of tokens will be taken off the market, which may contribute to greater price stability.

Of course, there is no guarantee that large investors are interested in reducing their position. In fact, history has clearly demonstrated that bitcoin investors are eager to buy on the dips.

In addition to bitcoin futures, talks of exchange-traded funds (ETFs) are also heating up. It was only last week that CBOE filed to list six ETFs with the Securities and Exchange Commission.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 700 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Bitcoin

Bitcoin Price Unable to Break Downward Spiral as Speculation Drives Market

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Bitcoin’s price touched new yearly lows on Saturday, as the broader cryptocurrency market risked further capitulation in the days and weeks ahead. According to the CEO of BitPay, bitcoin’s price is driven predominantly by speculation regarding future adoption and is less concerned with current market forces. If that’s the case, there’s a reasonable case to be made for a strong rally in the new year.

BTC/USD Update

The bitcoin price reached a low of $3,130 on Coinbase in early-morning trade, the lowest since August 2017. The U.S.-based exchange last quoted BTC/USD at $3,147. Exchanges Bitstamp, Bittrex and Gemini show similar levels, while Bitfinex maintained a $100 premium.

Market-wide data provided by CoinMarketCap show an average bitcoin price of $3,207, down 2.7%  over the 24-hour period.

Trading volumes across the virtual exchange market reached $4.1 billion, according to the latest available data. BitMEX saw its share of the total volume rise to 24.4% as derivatives continued to drive the market. BitMEX and other futures markets allow traders to profit from bitcoin’s decline. This avenue has increased in popularity since the selloff began last month.

Bitcoin’s market capitalization has experienced a significant drop over the course of the selloff. Now valued at $55.9 billion, bitcoin’s market cap is down a staggering $56 billion compared to early last month.

Speculation Drives Market

Speculation about bitcoin’s perceived utility in the future continues to influence market behavior far more than its actual use in today’s market, according to Stephen Pair, CEO of BitPay. Although BitPay is focused on supporting the actual market for bitcoin payments, this segment has little impact on how BTC is priced by investors and speculators.

“A very big component of the price is certainly speculation,” Pair said in a recent interview with CNBC’s Squawk Box. “It’s investors speculating on the future usage and adoption of this technology. A small component of the price is actual utility, and that’s what BitPay is focused on — using the platform and delivering products to our customers that they find valuable.”

BitPay is hoping to radically alter how bitcoin is priced in the future – not by manipulating the market, but by expanding adoption of cryptocurrency payments. Currently, BitPay processes roughly $1 billion in transactions per year, a figure Pair believes should grow ten-fold in the coming years.

Although bitcoin is accepted by hundreds of thousands of merchants globally, its primary utility continues to be as a store of value for investors looking to capitalize on the alternative asset class. Now that the initial crypto craze is over, adoption as a payment mechanism is the next great hurdle facing BTC and its peers.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 700 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Bitcoin

Bitcoin Price Scrapes the Barrel While Stellar (XLM) Losses Fall in Line

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Bitcoin returned to its lowest valuation of the year on Friday, as the last week of cautious upward movement by the crypto market came to a crashing halt.

Just last week BTC fell to a dollar valuation in the high $3,200 range – a fifteen-month low at the time. After seven days of false hope and another rinsing of weak hands, BTC returned to the same valuation early on Friday morning – a sign that $3,000 is destined to act as a baseline in the short-term?

Meanwhile, after months of positive developments and upward momentum, Stellar (XLM) is finally feeling the pinch and may be about to fall back in line with average market losses. XLM’s valuation is down over 18% for the week, and 7.5% for Dec 14th alone – leaving Tether (USDT) waiting in the wings to take over XLM’s 4th spot ranking by market cap.

Bitcoin Price – BTC/USD

Bitcoin fell 4.75% leading into Friday morning, compounding 10% losses over the last five days. From the daily high of $3,448, BTC found itself trading as low as $3,200 on some exchanges, while the aggregate valuation drawn from all exchanges remains closer to $3,300 at time of writing.

Bitcoin volume remains high while overall trade volume has declined. This has sent BTC dominance to over 55% again, and may be the beginning of a trend which sees altcoin gains continually cashed out to the more trusted BTC (via USDT) for the duration of the bear market.

Stellar Price – XLM/USD

A portion of those gains may now be coming from the Stellar market, which is being dominated by USDT and BTC trades as of Friday.

From the daily peak of $0.111740, XLM’s valuation fell to £0.103288 by noon Friday. That’s a 7.5% decline for the day, and comes on top of 18.3% losses over seven days as Stellar finally seems to be falling in line.

Stellar had kept the bears at bay for much of the prolonged market dip in the last few months, even rising in the rankings to become the 4th highest capped cryptocurrency. Fuelled by prominent announcements and almost constant speculation regarding a Coinbase listing, XLM managed to buck the trend and hold onto its value while all around it were losing theirs.

Now, this latest dip has singled out XLM specifically, leaving the coin’s losses firmly in line with ETH and the major alts’ +60% losses since mid-November. Once valued at nearly $17 billion by market cap at its peak, Stellar is now valued at less than $2 billion, and only the slightest fluctuation by ‘stable’ coin, Tether, would drop XLM out of the top four ranked cryptos.’

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 105 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Analysis

Crypto Update: Majors Testing Lows Following Broad Selloff

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The major cryptocurrencies have been once again under pressure in the past 24 hours and most of the coins got very close to their recent lows, even as the losses are limited for now. While the top coins avoided a breakdown, given the overwhelmingly bearish long-term picture and the steep short-term trend, odds continue to favor new lows in the coming weeks, so traders and investors should still remain defensive.

Dash/USD, 4-Hour Chart Analysis

The continued technical weakness in the lagging coins, like Dash, and the lack of a relatively strong leadership is still apparent, and it reinforces the bearish overall picture. That is true even as the long-term momentum indicators are showing deeply oversold readings and investors sentiment remains very negative which could lead to a larger scale correction after a short-term trend change. That said, traders shouldn’t enter new positions here until we see meaningful short-term technical improvements.

BTC/USD, 4-Hour Chart Analysis

Bitcoin failed to regain momentum despite the weekend bounce and the coin is back near its recent low trading near the $3250 level today. The key $3600 level is out of reach for the most valuable coin, and with that in mind, our trend model remains on clear short- and long-term sell signals.

The current weakness of BTC is a negative sign for the whole segment, and a test of the key long-term $3000 level is more and more likely. Further string resistance is ahead between $4000 and $4050, and traders and investors shouldn’t enter positions here.

ETH/USD, 4-Hour Chart Analysis

Ethereum has been trading in a very narrow range in recent days, and the coin is still stuck below the key $95-$100 zone, as it failed to show relative strength despite being among the most oversold majors. ETH also faces strong resistance near $120 and $120, with the next major support zone found between $73 and $75, and traders and investors should still stay away from the coin.

Litecoin Breaking Down Again?

LTC/USD, 4-Hour Chart Analysis

Litecoin is threatening with another break below support today, with the $23 support level looking very weak now, and the steep short-term downtrend remains clearly intact in the coin. LTC continues to be relatively weak from a short-term standpoint, and traders shouldn’t consider even ultra-short term positions here, despite the deeply oversold broader picture.

The next major support zone is found between $20 and $20.50 and odds favor a test of that zone as soon as in the coming days, with strong resistance found near $26 and $30.

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to hover around the $0.30 level, still being very weak on the short-term time-frame, and being on sell singles both short- and long-term in our trend model. XRP faces strong resistance near $0.32, $0.3550, and $0.3750, while primary support is found at $0.28, with the prior bear market low being at $0.26. We expect at least a test of the lows in the coming weeks, despite the still relatively strong long-term technical setup and new low bear market lows are also likely in Ripple.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 417 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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