Throughout all of 2018, there was no week more unprofitable for the crypto market than the previous one. On Sunday, November 25, Bitcoin updated its 12-month low, dropping to $3,838 and losing more than 26% over the week. Other coins followed Bitcoin as Ether went down to $115, losing its place in the market. The second-largest coin by capitalization was Ripple, which was trading at $0.37. And the total capitalization of the crypto market over the week decreased by $57 billion. Under the current situation, many market players panicked, while others found opportunities to make money. DeCenter found out what traders and large investors are doing during the current drop and what leading analysts forecast.
For the second week in a row, the cryptocurrency market has been in a state of collapse. On November 19, Ran Neuner, the host of the CNBC’s show Cryptotrader, noted extremely pessimistic sentiments among crypto players:
Other members of the crypto world who have lost impressive investments over the past week confirm his words. According to Bitcoin.com, one of the users of the English-speaking anonymous forum 4chan got rid of all his crypto investments and urged others to do the same: “That’s it, I sold,” conceded one poster, accompanied by an image of weed-smoking Elon Musk photoshopped to resemble Brendan Fraser being justed. “I’m free. I’m finally free from this fucking hell of scammers […] It was fun and games for a while, but now it’s just a cruel, sick joke. I bought [BTC] at 15K. No human can look at their money disappear before their very eyes and not be bothered. You know we’re going to 3K, right . . ? Let’s all stop pretending that this is gonna be anything but a bear market until 2020.”
The massive sale of digital assets by traders also influenced long-term Bitcoin holders, who invested in their first cryptocurrency in early 2017. This is evidenced by the data of the cryptocurrency trading company Genesis. The head of the company, Michael Moreau, notes that investors who acquired Bitcoin at the beginning of last year started selling their assets for the first time, approaching their base value when buying. The investors who bought Bitcoin for $900–$1,300 in the first quarter of 2017 saw its explosive growth, which at its peak marked a historical maximum of $19,783. The current market situation, however, does not give them hope that something will change soon.
In an interview with Forbes, a crypto trader and investor in digital currencies, known as Altcoin Thoreau, also noted that there are no signs that the bear market is coming to an end: “Price tells us the trend has been bearish since crypto’s parabolic move and top in 2017. Though the market conditions are not the same, if we compare the last parabolic move for Bitcoin in 2013 to today’s market, we still have some time to go before the trend reverses. The last bear market was more than 600 days and, at the time of this writing, the current bear market has only been 344 days.”
This is evidenced by well-known crypto analyst and founder of Woobull.com, Willy Woo, who believes that the present Bitcoin bottom is still ahead, and the end of the bear market will not come before the second quarter of 2019: “The latest data from our blockchain and macro market indicators are still relevant. The NVTS indicator has changed, which has violated its support, which is a signal to sell. All our blockchain indicators point to a bearish trend. NVT, NVTS, MVRV, BNM, NVM. Of course, they are experimental, but to this day, they had given very accurate forecasts, even when traditional stock indicators suggested the opposite. As long as some catalyst does not affect the trend change, we will observe a bear market until the middle of 2019.”
According to Woo, until the end of the bear trend, Bitcoin either capitulates or will trade in a side trend. As for altcoins, market players will pump them. At the same time, most of the profits from the altcoin trade will be directed to Bitcoin, which by that time will reach its bottom and be ready to start an uptrend that will last until the next decline in the block reward in 2020.
What Level Is the Bottom At?
The head of the American startup Civic and well-known advisor in the crypto industry Vinny Lingham gives a conservative assessment of the crypto market. Like many other players, the expert does not think that Bitcoin will break through the level of $6,000 by the end of 2018. According to the analysis of crypto analyst Murad Makhmudov, Bitcoin is in a state of a long-term descending triangle.
If the current market trend continues, then the first cryptocurrency will break the bottom, leaving below $3,000 before the end of 2018.
The low at $3,000 is not beyond the limits of probability, provided that the pattern of the descending triangle reaches the end.
Mati Greenspan, the chief analyst of the eToro social trading platform, also spoke about the possible level of support for Bitcoin at $3,000: “It’s impossible to say for sure. Now that Bitcoin has broken the key psychological level of $5,000, the next logical level of support we can spot on the graph isn’t until $3,000. It doesn’t necessarily have to get there, though. If it turns around now, it would be a very bullish sign indeed.”
Jani Ziedins, the technical analysis specialist of CrackedMarket, also sees the lower limit of the Bitcoin exchange rate at $3,500, after which the market will begin to rehabilitate: “It is possible that the rebound will occur around $3,500 and return the rate to $5,000. Of course, now it does not sound like a significant change, given the current price drop, but a return from $3,500 to $5,000 is almost a 50% payback over several days of work.”
Traditionally, other cryptocurrencies will follow Bitcoin. Over the past week, most of the cryptocurrencies (except stablecoins), including Ether, Bitcoin Cash, Litecoin, and Ripple, have lost from 10% to 40% of their past values.
It is noteworthy that these fluctuations do not disturb institutional investors. This is evidenced by the head of the department of digital assets at VanEck, Gabor Gurbacs. In an interview with American Forbes, Gurbacs said that large investors are neither afraid of $3,000 nor $10,000 per Bitcoin. They are more interested in the infrastructure and its growth rates, which make this sector extremely attractive for investments: “Large financial institutions are more focused on proper market structure than short-term price fluctuations. How do we properly value digital assets? How do we custody digital assets? Are their ETFs available with proper market and investor protections? Most large institutions do not really care if Bitcoin ends 2019 at 3,000 or 10,000. I think market structure is getting better every day and crypto start to look more and more like the commodities and equities markets.”
At the same time, over the past two weeks, the interest of large investors in Bitcoin futures on CME and CBOE has sharply increased. Futures allow one to play against Bitcoin, thus making a profit from the fall of the cryptocurrency market. According to Bloomberg, on Monday, November 19, the total number of open positions on futures on Bitcoin rose to 22,266, and this is a historical maximum.
The Current Drop Is a Time of Opportunity
Obviously, not all market players see losses in the current situation. As Mati Greenspan noted, despite the current collapse, the digital asset market has not lost its appeal to some investors:
Now the most interesting assets for investors are Bitcoin and Ripple. This is evidenced by data from eToro, according to which, customers of the trading platform increased their contributions to these coins.
Moreover, Greenspan believes that alarmists and weak players are now leaving the market: “Many crypto traders are happy to continue holding, even with such low prices. I also assume that large financial institutions find current prices extremely attractive for purchasing cryptocurrencies.”
Armen Gevorkyan, the founder of Super Margin, shared a similar opinion during a panel discussion at the international blockchain conference Crypto Event RIW. The entrepreneur believes that institutional investors are now invested in digital assets, but they are doing so gradually and in small bites.