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Historically, over the past nine years, Bitcoin (BTC) has undergone four major corrections, which have led Bitcoin to decline more than 80% in value terms. The correction of the cryptographic market which occurred in 2018 resulted in a 69% reduction in the price of Bitcoin, with some other cryptocurrencies such as Binance Coin (BNB) and EOS which recorded lower losses.
In August 2010, August 2011, January 2014 and January 2018, Bitcoin showed losses from 70 to 80 percent against the US dollar.
As reported earlier by Cointelegraph, according to the researchers at Chainalysis, the Bitcoin market has matured in the last nine months. Despite a sharp drop in the price of Bitcoin, most investors maintained their investments, minimizing their position alterations even during a period of uncertainty and extreme volatility.
"The market seems to have recalibrated after the entry of many new market participants with different beliefs and expectations than those who held Bitcoin before 2017. Neither long-term investors nor new speculators have changed their positions much. This summer suggests that the market will make a big move, for better or for worse, only in response to a fundamental change ".
The maturity of the Bitcoin market has been evident in the stability of BTC since 6 August. Over the past two months, Bitcoin has remained stable between $ 6,300 and $ 6,800, rarely exceeding the $ 6,800 resistance level, while other cryptocurrencies like Ripple and Ethereum have shown high volatility.
Image source: coin360.io
Over the two-month period, Bitcoin lost nine percent of its market valuation, while Ethereum and Ripple recorded 50 percent corrections, which eventually led to both the Ripple native cryptocurrency XRP and the 39; ETH, the base currency of Ethereum, to rise in the second half of September.
The increase in the stability of Bitcoin has allowed the market to become less sensitive to hype and specific events. The main positive developments in the cryptocurrency sector – such as the formation of Bakkt by Microsoft, Starbucks and ICE to improve the accessibility and liquidity of Bitcoin – have barely had an impact on short-term price developments. term of the Bitcoin.
Experts like ShapeShift CEO Erik Voorhees, billionaire investor Mike Novogratz, the legendary venture capitalist Ben Horowitz and the head of the Coinbase technology, Balaji Srinivasan, believe that the cryptography market will recover in the coming months.
Trend of the main cryptocurrencies in 2018
On CNBC's "Crypto Trader", the popular CEO of ShapeShift, a cryptocurrency trading platform, Erik Voorhees said that the bearish Bitcoin market and other large cryptocurrencies are gradually coming to an end.
Voorhees explained that while the bear market is not completely finished – given the 80% decline in the evaluation of the encrypted market – the market seems to have recovered from the worst part of the correction.
"I do not expect it [the bear market] to finish soon, although I think the rate of collapse has slowed considerably. Generally in these bubbles, after going through several months of a downward trend, for a while you go out in a range […] But I think we ended up with the majority of the collapse. "
ShapeShift CEO Erik Voorhees
The analysis of the Voorhees cryptocurrency market accurately described the current state of the market. Since June, the cryptography market has been in a process of extinction, maintaining close levels of support at a low level of $ 190 billion and trying to get out of the $ 220 to $ 230 billion.
For example, on September 25th, the price of Bitcoin Cash (BCH) was around $ 420. As of September 26th, the price of BCH remains above $ 540, up more than 20 percent a day. As such, Voorhees noted that it is a feasible time to start accumulating crypto, because the market has been volatile in its low price range.
Several cryptocurrencies, including Cardano (ADA), XRP and Stellar (XLM), have shown similar volatility upward, recording gains of 10-30% over short periods of time. In the coming months, it is likely that the cryptography market will continue to recover gradually, but will experience large temporary peaks.
Bitcoin's obvious trend: volatility between $ 6,000 and $ 8,000
The trend of Bitcoin, the most dominant cryptocurrency on the market, has been quite predictable. From February of this year, Bitcoin has experimented with a model of reaching a new monthly high and going down to an annual minimum the following month. The gap between the monthly minimum and the annual minimum decreased over time, as reported by the bottom Bitcoin chart.
Image source: CoinMarketCap
In early February, Bitcoin dropped to $ 6,000, but the following month it rebounded to $ 10,000. In April, Bitcoin dropped to an annual low again at $ 6,000, only to rebound to $ 9,400 the following month. But the gap between the annual minimum and the monthly maximum has decreased. In the following month, June, the price of Bitcoin fell to $ 6,000, reaching $ 8,400 the following month.
In August, Bitcoin fell again to $ 6,000, attempted a $ 8,000 recovery, but failed and remained in the region at $ 7,000. Since it hit $ 7,000, Bitcoin has dropped in the lower region of $ 6,000.
It is obvious that the Bitcoin market has hit the bottom in the region of $ 6,000, after major attempts to overcome resistance levels at $ 10,000, $ 8,000 and $ 6,000. Whenever a resistance level was tested, the strength of a short-term rally diminished, preventing the dominant cryptocurrency from testing higher levels of resistance.
Billionaire investor Mike Novogratz declared that the market has begun to show signs of weariness on the part of the sellers, since the bears have begun to become uncomfortable by selling cryptocurrencies at such a low price. Novogratz underlined that the cryptocurrency market has hit the bottom on the basis of various technical indicators.
"I think we put a low point yesterday, retouched the highs of last year's end and the acceleration point that led to the big rally / bubble, the markets like to go back to the breakout, we tracked down the whole bubble."
Entry of institutional investors
Throughout 2017, especially with the crypto market that reached its all-time high of $ 800 billion, talks around the potential entry of institutional investors have intensified. However, on closer inspection, the great rally of the crypto market at the end of last year was clearly triggered by a new wave of interest shown by retailers and individual investors globally.
In regions like South Korea and Japan, interest and demand for cryptocurrencies increased to the point where stock exchanges no longer had cryptocurrency supplies to sell to buyers, which led to the emergence of awards.
When the price of Bitcoin reached an all-time high of $ 20,000, the price of Bitcoin exceeded $ 24,000 in South Korea's cryptocurrant exchange market.
Even if the institutions were interested in investing in the cryptocurrency market, Kyle Samani, general partner of Multicoin Capital, said that the trusted caretaker solutions were not present and the lack of infrastructure prevented the institutions from engaging in the asset class. He said:
"There are many investors where custody is the last barrier." Over the next year, the market will realize that security is a problem that has been solved, which will release a big wave of capital. "
Ari Paul, co-founder of a large-scale Cryptocurrency Block Tower, Tower Tower, echoed Samani's sentiment and declared:
"The custody is not binary, it's not as if the Coinbase Custody was launched and suddenly every pension generated $ 100 million in BTC.It takes time for custody solutions to gain reliability, but I think we will have a strong custody of third parties by September of this year, which will allow institutional inflows to start accelerating: Once a couple of large traditional money managers announce that they are including BTCs as "digital gold" in their portfolios, others will follow. "
With BitGo and Coinbase already approved as trusted Bitcoin custodians in the US market and in the major banks Citigroup, Goldman Sachs and Morgan Stanley preparing to serve customers in the encrypted market, Novogratz explained that in the coming months, the institutions will enter market.
Once Bitcoin surpassed resistance levels of more than $ 8,800 and $ 10,000, Novogratz said that within three to six months the institutions will begin to allocate their capital to the market.
"It is also a bull market in institutions that build the infrastructure necessary for real money investors to start investing in this space […] I think that between three and six months from now, there will be an "all clear" sign for people – big institutions and pensions [funds] – to start investing. "
If the institutions enter the encrypted market, Novogratz stressed that the price of Bitcoin will probably reach a 30% increase by the end of 2018.
According to the Coinbase Chief Technology Officer, Balaji Srinivasan, initially gained significant confidence in Bitcoin and in the cryptographic market after surviving the crash in 2011. The resilience of the cryptographic market and its ability to recover from large adjustments have shown the market potential for investors.
The 2018 correction has had a similar impact on the market. Although many investors have been negatively impacted by the 69% drop in the price of Bitcoin, the market has seen some of the most positive news throughout its history over the past eight months.
Beginning with Goldman Sachs, Citigroup and Morgan Stanley who develop trusted cryptocurrency solutions, Bakkt, Nasdaq and many other regulated financial institutions in Japan and South Korea have begun to find ways to support the encrypted market.
More recently, Brazil's largest independent brokerage firm has announced plans to integrate a Bitcoin and Ethereum exchange in the coming months, after receiving government support that has opened an investigation into the country's major banks between charges according to which the banks did not provide sufficient cryptographic exchange banking services.
"The reason for this thing [cryptocurrency] he really had legs after 2011, when there was a bubble and he got up, and he came down, and he did not go to zero. It has stabilized and has continued to rise. At about that time, in practice, I said, "Ok, this will hold, it has legs, it will not go to zero". It was a constructive year. We're running crypto this kind of crash-build bubble stages, and this really is when I start getting involved. "
The crash-bubble phase of Bitcoin and the encrypted market was from January to July and, as the market has done since 2011, the cryptocurrency market is expected to recover. Compared to last year, in terms of regulation, infrastructure and development activities, the cryptocurrency and blockchain sector has improved levels never seen before.
Increase of development activities
Ben Horowitz, co-founder of Andreessen Horowitz (A16Z), a venture capital company considered to be one of the most successful investment companies in the technology sector, said that the activities of developers in the blockchain sector resonate with that of the Internet in 1990.
Horowitz has explained that has not seen such a high level of development activity in a single sector from the Internet, and considering that cryptocurrencies and blockchain networks are essentially computing networks, the exponential increase in project development activities blockchain is a positive indicator of growth.
"I think there's probably more crypto development activity than in everything we've seen from the internet and the right way to think about it is [that] is a new calculation platform. Once every ten years, a new IT platform arrives. The thing on which it is deceptive [it] is that when the new platform at the moment is generally worse in many ways than the old platform, but has some new features. "
Ben Horowitz, the co-founder of Andreessen Horowitz
In a study published in 2017, JP Vergne, a professor at Ivey Business School, revealed that the activities of developers are the most accurate indicator of the evolution of cryptocurrency exchange rates.
On the basis of the market trend since 2011 and its ability to recover the new historical highs after a major correction, it is highly probable – given the high level of activity of the developers around the big blockchain networks – that the market of cryptocurrencies will recover from the end of the year as many experts predict.