Another year is almost over. What an interesting year it has been. Two major and rather unexpected geopolitical developments: Brexit and the election of Donald Trump, are not able to halt the march of the world indices. The American Indices in particular manage to rally to all-time high. With only a few trading days left in 2016, let’s take a look at the return of  major asset classes. At the top of the list is Bitcoin providing 110% return as of Dec 27.


Interestingly, a good portion of the rally in Bitcoin happened in Q4 2016 since the US election. Although Bitcoin has not passed above the record level against the dollar, the crypto-currency has already hit new all time high against the Pound and Euro. Against the Pound, one bitcoin is worth 784.19 today, above the £694.65 reached on November 2013 as the chart below shows.


Against the dollar, it currently sits at $952, still below the $1137 set in 2013. Against the Euro, the crypto-currency has also made all-time high at €918 as the chart below shows:


Although the price of bitcoin is still below the record level in dollar terms, in terms of market capitalization, Bitcoin has now made an all time high market cap of $15 billion due to larger number of bitcoin on the market now. This market cap is comparable to the market cap of silver, but compared to the total value of gold in the world at $7.8 trillion, bitcoin is only 0.17% of the value.

The rise in Bitcoin is attributed to several factors. The recent currency policy by India’s Modi and Venezuela’s Maduro are credited as one of the factors, as the leader of these two countries tried to replace the old currency notes. Although there are valid reasons for the policies, it creates obvious side effects with public confidence in the national currencies taking a hit. Another driver for Bitcoin is the strict capital controls in some countries like China which may drive capital into bitcoin to circumvent the control, as well as the steady devaluation of Chinese Yuan. Most bitcoin trading takes place in China so financial conditions in the country can have a huge impact on Bitcoin’s price.

Bitcoin’s popularity is due to its role as an alternative form of paper currency. Unlike the fiat (paper) currency which the government can manipulate by printing in unlimited amounts or getting replaced (as in the case of India and Venezuela), the crypto-currency is not controlled by the government or the central banks. Bitcoin also has another advantage compared to other alternative forms of currency such as gold: It is accepted as a valid medium of payment by various merchants.

This year, Bitcoin beats gold by a big margin with Bitcoin doubling in value while Gold is only up 7.3%. However, the drawback of Bitcoin is it’s only 7 years old and so it still has a very short period of life and it has a very erratic movement, which is not suitable for everyone. In addition, there’s also the threat of hacker as Bitcoin experienced in August 2016 when hackers stole 119,756 bitcoins. Thus, as an investment vehicle, it still has many questions and thus is hard to be used as a large store of values.

We wrote an article about Bitcoin back on Sept this year titled “The rise of Crypto-Currency Bitcoin” highlighting the potential of this digital currency. If you would have bought Bitcoin after our article, it would have been up 100% by now in just a few months. That’s how volatile it is. Going forward, we think that BTCUSD (Bitcoin in US Dollar terms) is going to rise and eventually take out the previous $1137 peak, joining BTCEUR and BTCGBP which have made an all-time high. Below is the weekly chart of BTCUSD with possible extension to 1316 – 1589 at minimum in coming years. With Bitcoin being as volatile as it is, the target could easily been reached in 2017.


If you enjoy this article, feel free to read other Technical Blog and take our 14 days trial FREE to get access to Elliottwave charts for 52 instrument in 4 time frames, Live Trading Room, Live Session, 24 hour chat room, and much more.

FURTHER DISCLOSURES AND DISCLAIMER CONCERNING RISK, RESPONSIBILITY AND LIABILITY Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of xperience and risk appetite. Do not invest or trade capital you cannot afford to lose. EME PROCESSING AND CONSULTING, LLC, THEIR REPRESENTATIVES, AND ANYONE WORKING FOR OR WITHIN WWW.ELLIOTTWAVE- FORECAST.COM is not responsible for any loss from any form of distributed advice, signal, analysis, or content. Again, we fully DISCLOSE to the Subscriber base that the Service as a whole, the individual Parties, Representatives, or owners shall not be liable to any and all Subscribers for any losses or damages as a result of any action taken by the Subscriber from any trade idea or signal posted on the website(s) distributed through any form of social-media, email, the website, and/or any other electronic, written, verbal, or future form of communication . All analysis, trading signals, trading recommendations, all charts, communicated interpretations of the wave counts, and all content from any media form produced by and/or the Representatives are solely the opinions and best efforts of the respective author(s). In general Forex instruments are highly leveraged, and traders can lose some or all of their initial margin funds. All content provided by is expressed in good faith and is intended to help Subscribers succeed in the marketplace, but it is never guaranteed. There is no “holy grail” to trading or forecasting the market and we are wrong sometimes like everyone else. Please understand and accept the risk involved when making any trading and/or investment decision. UNDERSTAND that all the content we provide is protected through copyright of EME PROCESSING AND CONSULTING, LLC. It is illegal to disseminate in any form of communication any part or all of our proprietary information without specific authorization. UNDERSTAND that you also agree to not allow persons that are not PAID SUBSCRIBERS to view any of the content not released publicly. IF YOU ARE FOUND TO BE IN VIOLATION OF THESE RESTRICTIONS you or your firm (as the Subscriber) will be charged fully with no discount for one year subscription to our Premium Plus Plan at $1,799.88 for EACH person or firm who received any of our content illegally through the respected intermediary’s (Subscriber in violation of terms) channel(s) of communication.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD hits two-month lows amid USD strength

EUR/USD has pared its gains that followed upbeat preliminary PMIs for Germany came out above expectations, pointing to a recovery. The USD is advancing amid fears of the coronavirus.


GBP/USD drops below 1.31 amid USD strength, fails to sustain PMI gains

GBP/USD is trading below  1.31 after hitting a fresh high of 1.3172. The UK Manufacturing PMI beat with 49.8 and Services PMI with 52.9. The USD is gaining ground across the board.


Cryptos: Bears take over and draw a bloody moon

Despite appearances, Bitcoin is the asset with the best risk/benefit ratio. The current falls are adjusted to the ranges of the previous rise. Downward momentum expires in the first half of February.

Read more

Gold rebounds above $1560

The XAU/USD pair dropped to a daily low of $1556.70 during the European trading hours as the easing worries over coronavirus becoming a global epidemic and a broad-based USD strength put the pair under bearish pressure.

Gold News

USD/JPY drops to two-week lows near 109.30

The USD/JPY pair reversed its direction during the American trading hours as the risk-off atmosphere allowed the JPY to find demand as a safe-haven.


Forex Majors