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Exhale. The nightmare of the cryptocurrency market 2018 is finally over.
Obviously, another disadvantage is always possible, if not probable, but at least the year when bitcoin prices have fallen by over 80% and the market for brokers has lost almost 700 billion dollars of capitalization total.
By now, you're probably aware that the world's most important cryptocurrency, bitcoin (BTC), has catapulted more than 2,500 percent from its 2017 low to reach a new high of nearly $ 20,000 by December of that year.
Unfortunately for those who currently bet on the most immediate upside, one of the bitcoins many speculative bubbles or "hype cycles" peaked on December 17, 2017 and its price has been trapped in a downtrend and unstoppable record since then.
The following is an analysis of what exactly emerged for the price of bitcoins in the last 365 volatile days.
History of prices
When examining the bitcoin price history in 2018, two technical developments emerge: the average mobile death cross and the breaking support of $ 6,000.
Moving averages are exactly what the name suggests: an average of the price of bitcoins over specified time periods which, if plotted on a chart, tend to provide support and resistance to price, as well as the strength and prejudice of the long-term trend .
Multiple moving averages are commonly used on the same chart and complement the bearish development known as the "cross of death" when a short-term moving average crosses under a long-term moving average, indicating a significant loss of strength in the longer-term trend.
BTC / USD witnessed a death cross between 100 to 200 days moving averages on April 16, confirming the end of its most recent uptrend market.
Before the death cross had occurred, the price fell to around $ 6,000 in February.
All eyes were at this level from that day on, while the price went on to test it several times before finally breaking nine months later, on November 14th.
Up to this point, many believed that $ 6k had fortified itself as the "fund" of the bear market 2018 as it had been strongly defended for what in the encrypted time seemed like an eternity.
Coincidentally, November 14 was the day before one of the largest cryptocurrencies in the world, bitcoin cash (BCH), suffered a hard dividing fork, which many suspects provided enough uncertainty in the broader market to catalyze the breaking of the bitcoins under the $ 6,000.
Now that it has closed the year at the price of $ 3,747, 2018 will enter the record book as the worst 12-month period of bitcoin in terms of price.
The performance of 2018 cryptocurrency leading to a depreciation of more than 70% from its opening price of $ 13,062 is considerably worse than the previous record holder, 2014, the year when the price fell to around 55% to be closed, according to CoinDesk pricing data.
Trading volume
The monthly trading volume of Bitcoin peaked at the end of 2017, bringing a total of $ 70.2 billion through the stock exchanges in November just before its price reached its all-time high, according to data from Bitcoinity.
Trade volumes, along with the price, have been stuck in a downtrend since then and throughout 2018.
In September, only $ 7.8 billion in monthly trade volume was recorded, a net difference and 88% down from the high recorded in November 2017 and at the minimum of 15 months at the time.
However, performance by volume for 2018 is not all daunting.
Using the Coinmarketcap data, a post from Satoshi Capital Research more than 2 trillion dollars of bitcoins were exchanged in 2018, which from the 1st of December marked a 61% increase compared to the previous year.
Although it is not really the 96% increase recorded in 2016 in 2016, it is clear that investor interest has continued to grow substantially in 2018 despite relentless downward market conditions.
NVT report
There are many other tools that can be used to evaluate the bitcoin market conditions in 2018 in addition to technical analysis.
Our favorites are those created by cryptocurrency researcher Willy Woo who focus on various bitcoin blockcoin metrics and its relationship to price and network value, such as the NVT report.
The ratio of the transmitted network value (NVT) emulates the price / earnings (P / E) ratio used to evaluate the price of a company's share by comparing the bitcoin network value (market capitalization) and the value of the funds transmitted through its blockchain.
A ratio above 100 indicates that the price of the bitcoin has exceeded its network value, or in other words has become overbought. Conversely, a reading of less than 100 indicates that the market represents a truer value for bitcoins, where the price is less at risk of seeing an aggressive and long-term downtrend.
As can be seen in the table above, the bitcoin NVT ratio was well above 100 for almost the entire 2018 and even reached the highest level since 2011 above 200, confirming that the market was significantly overvalued and a decline in price and network value was highly probable.
Now, at the end of the year, bitcoin has fallen by about 80% of the value of the network, from $ 280 billion to $ 56 billion. While the downward trend is still aggressive, the estimated daily value transmitted through its blockchain ceased to plummet in May and stabilized above about $ 250 million since then, allowing the NVT report to finally begin to deflate.
At the time of writing, the bitcoin NVT report is 108, so the market is still slightly overbought, but it is much closer to finding a healthy fund than before the year.
If the bear market recorded in 2014-15 is an example, the NVT ratio will again have to stabilize for several months below 100 before another upward trend can start.
It should be noted that the Blockstream liquid side chain was launched on October 10, which requires a certain volume of out-of-chain bitcoins, so not all transmitted volumes are taken into account in the NVT report.
On hold
In fact, 2018 was a historically negative year for bitcoins if only the price and value of the network are taken into account.
Other metrics, however, as the total volume of trade, show a substantial increase in investor investment compared to the previous year, while the NVT report shows that the last bitcoin bubble is about to be completely deflated .
Overall, 2019 will be an interesting year for bitcoins as assessments deflate and continue to align with core principles.
In short, the bitcoin market in 2019 can not be worse than 2018, right?
Revelation: The author holds BTC, AST, REQ, OMG, FUEL, 1 °, is AMP at the time of writing.
Bitcoin bubble through Shutterstock; graphics of Trading View
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