Bitcoin’s recent meteoric fall means calls for rallies to $25,000 in 2018 are in jeopardy
MarketWatch: Back in June, one of the staunchest and more vocal bitcoin proponents, Tom Lee of Fundstrat Global Advisors, reiterated a prediction that the asset would end the year around $25,000 during a Bloomberg interview (paywall). Bitcoin Foundation‘s Llew Claasen back in February said bitcoin would touch $40,000 by the end of this year, in a Business Insider interview (paywall).
However, the digital asset’s current dismal trading action makes those lofty prognostications for a finish at new records above $20,000 and beyond questionable, if not unlikely.
“I can’t base my analysis on anything other than technicals and right now the charts are looking very bearish. Therefore, as things stand, I have no reason to expect bitcoin to go to those crazy levels again,” Fawad Razaqzada, technical analyst at Forex.com told MarketWatch back in late June.
Robert Sluymer, technical strategist at Fundstrat Global Advisors, and a colleague of Lee’s concurs with Razaqzada, during a late-June interview.
“You have what is happening and what could happen and I think if you are using technical [analysis]—and you have to be very truthful about what is happening—then we have a downturn in place,” he said.
“From my perspective price is news and [bitcoin] needs to show evidence of turning to reinstate bullish calls,” said Sluymer, referring to the asset’s breach below levels of around $7,000 a few weeks ago.
In order for bitcoin to hit $40,000, it would need to surge by about 590% in the following six months; for a finish at $25,000, the asset would need to rise more than 330% by year-end.
Is that possible? Sure. And it appeared that bitcoin would attempt a bounce back in July—until that run deflated on what some have attributed to the delay in a decision by the Securities and Exchange Commission on a proposed bitcoin-backed exchange-traded fund.
Bitcoin bounced by about 240% from its November 2017 low to a peak at $19,783 within a few short weeks to mid December, according to news and research site CoinDesk. On top of that, the rolling six-month change for bitcoin from August to December of last year represented gains of at least 300%, according to WSJ Market Data Group.
However, critics argue that last year was marked by euphoria centered on blockchain, the distributed-ledger technology that underpins virtual currencies, and cryptos like bitcoin, luring fresh interest in virtual currencies from Main Street and Wall Street alike, and helping to juice sentiment around the asset.
Fast forward to this period and bitcoin’s current decline in value comes even as the stage for further gains seems set. Institutions, some of which had cast a dubious eye on cryptos, have declared intentions to form trading platforms or invest in blockchain.
Bitcoin Will Fall to $5,000 Before Surging to $50,000 Before the End of the Year
Bitcoin is currently in the midst of a significant price rally. Thus, many experts have come out to say that the bad days are over for the top-ranked cryptocurrency. However, one trader believes that BTC will still see another dip before soaring to a new all-time high (ATH).
Bitcoin hasn’t Seen Bottom Yet
According to Arthur Hayes, BTC hasn’t seen the bottom yet. Speaking to CNBC on Thursday (July 19, 2018), the Bitmex co-founder and CEO said:
I don’t actually think we’ve seen the worst.
Hayes expects the current price rally to take BTC up to maybe $8,000 or $90,000. The Bitmex chief identified $10,000 as the most optimistic projection for the current BTC price increase. After this point, Hayes expects another massive drop that will see the number-one ranked token based on market capitalization set a new low for 2018.
I would like to see us test 5,000 to really see if we put a bottom in.
In June 2018, Bitcoin twice fell below $6,000 setting a new 2018 low at $5,700. Experts like TenX founder, Julian Hosp, predicted that BTC would dip close to $5,000 before setting a new ATH later in the year. Hosp’s end of year price forecast was $60,000.
Bitcoin Will Hit $50,000 by the End of 2018
Hayes still believes that his $50,000 BTC end of year price forecast can still come true. In an email to CNBC, the Bitmex chief said:
I think the current rally will top out close to but not greater than $10,000. Then we will fall and test $5,000. If that holds then we can rally to $50,000 by year-end.
Arthur Hayes also warned traders to be wary of the summer months because according to him, investors tend to cool off a bit. However, by the end of Q3 and the start of Q4 2018, Hayes expects the bullish sentiment to return once again.
Do you agree with Arthur Hayes’ BTC price analysis? What is your end of year BTC price forecast? Keep the conversation going in the comment section below.
Hacked: Will Bitcoin Rally to $20,000 Before the End Of 2018?
This time last year Bitcoin was just getting into the swing of its chunky 2017 bull run.
The week commencing 25th September 2017, until the week commencing 11th December, Bitcoin gained around 445%.
Bitcoin Rally 2017
Looking back at 2017, Bitcoin investors enjoyed a huge rally to the upside, towards the end of the year. It all started after a brief period of consolidation within mid-September. To which the following week saw the price begin to pick up some bullish momentum. Bitcoin at the time was only sitting within the early $4?000 territory. What happened next was somewhat of a freak instance. The price went on to see 11 weeks out of 12 closing with advances. Apart from one minor pullback seen the week commencing 6th November, the others saw chunky gains.
What Sparked the 2017 Rally?
There doesn’t appear to have been one catalyst driving this price excessively to the upside, however an array of points are worthy of consideration. During the middle of the year in 2017, Bitcoin started to get the attention of large Wall Street analysts. The likes of Goldman Sachs were making price predictions on Bitcoin, with other analysts starting to get involved with forecasts. That major financial institutions were publicly mentioning Bitcoin was most certainly helping it to gain greater mainstream acceptance.
It is likely that more and more investors started to become aware of Bitcoin’s inflated movements. This may have triggered some ‘FOMO’, or fear of missing out, sparking further demand. It seemed to be the case of jumping on the bandwagon. Elsewhere, the Chicago Board Options Exchange and Chicago Mercantile Exchange made Bitcoin futures available to be traded by investors, further helping with the legitimizing aspect.
Bitcoin Price Manipulation
There was much speculation across the market that some manipulation was going on with Bitcoin’s price. This appeared to originally circulate by a post from someone via a Bitcoin reddit post, creating a discussion on the conspiracy.
In June, new research hit the newswires, which heavily suggested that much of Bitcoin’s boom was due to market manipulation. This had been conducted by a University of Texas finance professor John Griffin, who has a 10-year track record of spotting financial fraud, and a graduate student Amin Shams. Together they examined millions of transactions on the cryptocurrency exchange Bitfinex. In a 66-page paper, it was noted the authors found that tether was used to buy bitcoin at key moments when it was declining. This supposedly helped “stabilize and manipulate” the cryptocurrency’s price.
Will The Moves Be Replicated?
Since the downfall of Bitcoin’s price from the middle of December, it has created a number of big barriers. These have proven to be a challenge breaking down again given the lack of historical technical levels in 2017, as the price was trading in complete unknown territory. Back during that bullish run, the sky appeared to be the limit. Unfortunately for the price now, there are historical levels, which are now resistance/supply blocks, as seen on the charts. This makes it very unlikely to see such moves that were observed last year. At the same time, technically the price is still ahead of where it was this time in October 2017.
Markets players have been cautious to commit, given how heavy Bitcoin started falling at the beginning of the year. Bull rallies that have taken place, proved to be unsustainable, with bears quickly pilling in and selling those.
Firstly, looking to the downside, around the range of $5,800 – $6,000, this has been the bottom for 2018. It does appear to be sturdy and proving itself as decent support, dealing with any downside pressure, for now.
In terms of barriers ahead, there are several top areas which are likely to make any bull run similar to that of 2017 very difficult. Just to mention some; heading into 7K, 7.5K, 8.5K, 9.5K and the psychological 10K mark. These are some key territories that are going to be a nuisance for the bulls.