Two thousand eighteen will be the year that will remain in the memory of all traders that were expelled out of the Crypto market. From the last rallies of the great December Bump to today, bears have overwhelmingly dominated the market. With the exception for a few days in early spring, the Crypto universe has been heading for the abyss.
At the 2018 Bitcoin Forecast, the minimum price target I set was $8,000.
A few weeks after the start of the new year, I saw that I had not well valued the extreme volatility of Bitcoin and much less the regulatory, security and technical problems that have helped the BTC/USD price set the minimum for 2018 at $3,136.25.
However, let's go a little beyond the price and see how the structures built around Bitcoin will close the year.
Bitcoin Futures Market
One year ago, the first Futures contracts were launched on Bitcoin. Hand in hand with the Chicago Board of Exchange (CBOE) and its parent company, the Chicago Mercantile Exchange (CME), the world's most regulated Cryptoassets trading initiatives began to work
According to the CME report, this has been the evolution:
Source: CME Bitcoin Consensus v12
Q4 of 2018 presents a growth of the negotiated volume by 119% in comparison to Q1. Since the launch, the monthly average negotiated amounts to $2.7 billion, with a record on November 20 in 14,490 contracts equivalent to 72K Bitcoins worth $307 million.
Source: CME Bitcoin Consensus v12
In this case, we can see how the spread between the Bid and Ask has improved below two ticks in the last month of the year. Even with the increase in volatility after the latest declines, the spread has remained at low levels.
Financial regulation: The elusive Bitcoin ETF
In the year that should have been the institutionalization of investments in Bitcoins, up to 9 proposals for the launch of ETF’s have been rejected. With the start of Bitcoin Futures in markets as well organized as CME or CBOE, it seemed that ETF’s were the next logical step. Unfortunately, this has not been the case because the regulators consider the proposals do not offer sufficient guarantees against fraudulent manipulation of the markets.
It is not clear that in 2019, the SEC will grant authorization for the launch of this type of product. The President of the Securities and Exchange Commission, SEC, Jay Clayton stated at the end of last November:
"I want to see better market surveillance and custody for digital currencies before being comfortable with a crypto ETF."
In turn, SEC commissioner Hester Peirce, who represents the most Pro Bitcoin ETF position in the regulator's decision-making body said:
"Don't hold your breath. I do caution people to not live or die on when a crypto or bitcoin ETF gets approved. You all know that I am working on trying to convince my colleagues to have a bit more of an open mind when it comes to [crypto]."
As you can see, there is not much urgency in resolving this issue. Many countries have advanced projects on Exchanges legislation, ICO’s, taxation and cryptocurrencies. Any step in that direction will be positive for Bitcoin.
Cryptomarket Security issues
Another critical factor in understanding Bitcoin's weakness is theft. In January, Coincheck suffered the most devastating theft in the history of cryptocurrencies with the disappearance of 500 million of NEM’s valued at $532 million.
In addition to Coincheck other exchanges have suffered attacks this year:
The Swiss Exchange Bancor was attacked in July, with thieves escaping with 24K Ethereum and other cryptocurrencies. Hackers stole a total value of $46 million.
The South Korean exchange Conrail suffered the theft of $1.1 million at Ethereums, TRX’s and NPXS’s.
The also South Korean Bithumb, lost $31 million in an attack $31 million although it has already been able to recover about $14 million. The Italian exchange Bitgrail was attacked and lost 17 million Nano´s worth $170 million.
The global figure for 2018 is close to $1 billion. Security is one of the points that must improve for 2019 since a sustained growth of the cryptocurrencies market is not going to be possible as long as there is the risk that your investment disappears overnight.
The people in charge of the exchanges have understood correctly the necessity to guarantee the investments of their clients. New security measures will be implemented, and in case of theft, the unwritten rule is to replace what has been stolen in customers' accounts.
2018 leaves us with little progress compared to the close of 2017. The Bitcoin futures market has grown significantly and has become consolidated as the only option for institutional investors. ETF’s on Bitcoin can be approved at any time, although statements from SEC commissioners seem to indicate that there is no rush to address the issue.
Security remains a weak spot, and it is very likely that negative news in this regard will continue to appear on a recurring basis in 2019. The rapid advances in supercomputing make it easier every day to decipher secure keys, so the work of all those responsible for security is going to be crucial to try to eradicate these attacks.
Bitcoin Forecast 2019
The year that is about to begin is going to be an essential one for Bitcoin without no doubt. After more than ten months of continuous falls, the next twelve months will be decisive for the long-term future of Bitcoin.
In the last three days, Bitcoin has emerged from the lows, exceeding $4,000. It is an increase close to 25% but in the medium term, it does not mean a lot. The time has not yet come to declare the annual minimum price level as a market floor. According to Hans Hauge in a recent interview.
"Going off the low Z-scores from the last two bubbles, and the fact that bubbles have the strange property of deflating to just above the last peak, I would say that the floor for Bitcoin in the near term is probably around $2,000 (the bubble before this peaked around $1,100)."
According to my analysis, the critical level is right at the price level of the annual lows at $3,126. The simple exponential average of two hundred periods in the weekly range is precisely at that price level, providing resounding support that for now, the bleeding bear market reached its end. The loss of this support level would be nefarious for the price of Bitcoin.
In the long-term technical analysis, I rule out those movements with an inclination greater than 60º in both directions of the market. Following this premise, I draw possible scenarios respecting the levels of resistance and long-term support.
As we can see in the weekly chart, the bears maintain important levels of activity, while the bulls improve in the last week but are still far from being able to dispute the leadership on the bear side of the market.
The short-term goal of the move started at the end of December 2018 and is at the price level of $6,000. At this point, the odds of a resumption of the bearish trend are high. (Point A)
If the bears retake control, the first medium-term objective would be back in the SMA200 zone at the $3,460 price level. The loss of this area would send a very negative message to the market, and the $2,000 region would be the next target. Below this point, next support, already in the price zone mentioned by Mr. Hauges, is at $1,332.(Point B)
At this point, Mr. Hauge comments:
"The last thing is that futures contracts have been getting more popular month over month, and we should be seeing Bakkt launch in January of 2019. This will add an option for futures settled in Bitcoin, rather than just in cash. If we see the same growth pattern with these contracts as the cash settled versions, it could be a key driver growth. Sometime in 2019, or 2020; I predict Bitcoin will reach $100k for a single coin."
On the bullish side, the least likely scenario is an absolute bullish movement. This linear scenario would have a target for December 2019 at the price level of $17,000 (Point C).
A second scenario, which would continue from point A, would fall back to the $4,600 price level and from there gain bullish momentum again and move towards the $8,300 price level (Point D).
The most likely bullish scenarios converge at a point slightly below $10,000 (Point E).
Forecast Poll 2019
|Average Forecast Price||3804.28|
|FXOpen team||4500.00 Sideways|
|Dmitriy Gurkovskiy||7360.00 Bullish|
|Brad Alexander||2500.00 Bearish|
|ForexGDP Team||4000.00 Bullish|
|Dmitry Lukashov||1500.00 Bearish|
|Tomas Salles||9900.00 Bullish|
|Stoyan Mihaylov||1890.00 Bearish|
|Aubrey Hansen||3641.50 Sideways|
|Gregor Horvat||7000.00 Bullish|
|Chris Svorcik||3500.00 Bullish|
|Joseph Trevisani||4000.00 Sideways|
|Ed Ponsi||4000.00 Sideways|
|HotForex Team||500.00 Bearish|
|Alberto Muñoz||1200.00 Bearish|
|Yohay Elam||7000.00 Bullish|
|Walid Salah El Din||2000.00 Bearish|
|OctaFx Analyst Team||4000.00 Sideways|
|Jeff Langin||2500.00 Bearish|
|Michael Pento||1290.00 Bearish|
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