Experts Discuss: the probability that Crypto Market recover by the end of 2018.
Historically, in the last nine years, Bitcoin (BTC) has experienced four major corrections, all of which have led Bitcoin to a decline of more than 80 percent in value. The correction that the crypto market experienced in 2018 resulted in a 69 percent drop in the price of Bitcoin, with some other cryptocurrencies such as Binance Coin (BNB) and EOS recording smaller losses.
In August 2010, August 2011, January 2014 and January 2018, Bitcoin showed losses of 70 to 80 percent against the US dollar.
According to the Chainalysis researchers, the Bitcoin market has matured over the last nine months, as Cointelegraph has previously reported. Despite the sharp drop in the price of Bitcoin, most investors clung to their investments, minimizing changes in their positions even during a period of uncertainty and extreme volatility.
“The market seems to have been recalibrated after so many new entrants into the market with beliefs and expectations different from those of Bitcoin before 2017. The maturity of the Bitcoin market has been evident in the stability of BTC since 6 August In the last two months, Bitcoin has remained stable in the range of 6,300 to 6,800 dollars, rarely breaking the resistance level of 6,800 dollars, while other cryptocurrencies such as Ripple and Ethereum have shown high volatility.
In the two-month period, Bitcoin dropped nine percent of its market valuation, while Ethereum and Ripple recorded 50 percent corrections, which ultimately led to both XRP, the native Ripple cryptocurrency, and ETH, the base currency of Ethereum, to increase in the second half of September.
The increased stability of Bitcoin has allowed the market to be less sensitive to advertising and specific events. Significant 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-had little impact on Bitcoin’s short-term price trend.
Experts like Erik Voorhees, CEO of ShapeShift, billionaire investor Mike Novogratz, legendary venture capitalist Ben Horowitz and Coinbase’s Technology Director, Balaji Srinivasan, believe that the crypto market will recover in the coming months.
In CNBC’s “Crypto Trader,” the CEO of the popular cryptocurrency trading platform ShapeShift, Erik Voorhees, declared that the bear market for Bitcoin and other large cryptocurrencies is coming to an end gradually. Voorhees explained that, although the bear market is not completely finished – given the drop of 80 percent in the valuation of the crypto market – the market seems to have recovered from the worst part of the correction.
“I do not expect it to end soon, although I think the rate of collapse has slowed down considerably. Generally in these bubbles, after going through several months of a downward trend, you stay in a range for a while. But I think we’re done with most of the collapse. “
The analysis of the cryptocurrency market conducted by Voorhees accurately described the current state of the market. Since June, the crypto market has been involved in a bottom-up process, maintaining support levels adjusted to the low level of 190,000 million dollars and trying to break the range of 220,000 to 230,000 million dollars.
For example, on September 25, the price of Bitcoin Cash (BCH) was around 420 dollars. As of September 26, the price of the BCH remains above $ 540, with an increase of more than 20 percent on the day. As such, Voorhees pointed out that it is a viable 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 volatility similar to the rise, recording gains of 10 to 30 percent in short periods of time. In the coming months, it is likely that the cryptography market will continue to recover gradually but experience large temporary peaks.
Obvious trend of Bitcoin: Volatility between $ 6,000 and $ 8,000
The Bitcoin trend, the dominant cryptocurrency in the market, has been quite predictable. Since February of this year, Bitcoin has experienced a pattern of reaching a new monthly high and falling to an annual low the following month. The difference between the monthly maximum and the annual minimum decreased with the passage of time, as shown in the Bitcoin chart shown below.
In early February, Bitcoin fell to $ 6,000, but rebounded to $ 10,000 the following month. In April, Bitcoin fell once again to its lowest annual level of $ 6,000, only to recover to $ 9,400 the following month. However, the gap between the annual minimum and the monthly maximum decreased. In the following month, June, the price of Bitcoin predictably fell to $ 6,000, reaching $ 8,400 the following month.
In August, Bitcoin fell back to $ 6,000, tried to recover to $ 8,000, but failed and remained in the region in the mid-$ 7,000. Since reaching $ 7,000, Bitcoin has fallen to the lower region of $ 6,000.
It is obvious that the Bitcoin market has bottomed out in the region in the mid-$ 6,000, after major attempts to break the resistance levels of 10,000, 8,000 and 6,000 dollars. Each time a level of resistance was tested, the strength of a short-term rally decreased, which prevented the dominant cryptocurrency from proving higher resistance levels.
Billionaire investor Mike Novogratz said that the market has begun to show signs of fatigue of sellers, since the bears have begun to feel uncomfortable selling cryptocurrencies at such a low price range. Novogratz emphasized that the cryptocurrency market has bottomed out based on several technical indicators.
Throughout 2017, especially when the crypto market reached a historic peak of 800,000 million dollars, conversations about the possible entry of institutional investors intensified. However, in retrospect, the big upturn in the crypto market at the end of last year was clearly triggered by a new wave of interest shown by retailers and individual investors worldwide.
In regions such as South Korea and Japan, interest and demand for cryptocurrencies increased to the point where the stock markets no longer had cryptocurrency supplies to sell to buyers, which led to the emergence of premiums. When the price of Bitcoin reached a record high of $ 20,000, the price of Bitcoin exceeded $ 24,000 in the cryptocurrency market in South Korea.
Even if the institutions were interested in investing in the cryptocurrency market, Kyle Samani, a general partner of Multicoin Capital, stated that there were no trustworthy solutions and that the lack of infrastructure prevented institutions from committing to this asset class. He said:
“There are many investors where custody is the last barrier, and over the next year, the market will realize that custody is a solved problem, which will release a large wave of capital.” Ari Paul, the co-founder of the large-scale cryptocurrency Block Tower, echoed Samani’s sentiment and said: “Custody is not binary, it’s not as if the Coinbase Custody was launched and suddenly every pension would be thrown $ 100 million to BTC. It takes time for custody solutions to gain reliability, but, I believe we will have strong third-party custody by September of this year, which will allow institutions to accelerate their inflows. Big traditional money managers announce that they are including BTC as ‘digital gold’ in their portfolios, others will follow it. “
With BitGo and Coinbase already approved as trusted custodians of Bitcoin in the US market and major banks Citigroup, Goldman Sachs and Morgan Stanley preparing to serve customers in the crypto market, Novogratz explained that in the coming months, the institutions will enter the market.
Once Bitcoin exceeds the main resistance levels at $ 8,800 and $ 10,000, Novogratz said that within three to six months, the institutions will begin to allocate their capital in the market.
“It is also a bull market in institutions that build the necessary infrastructure for real money investors to start investing in this space. I think that in three to six months, there will be a clear signal for the people, the big institutions and the pension funds, to start investing. “
If institutions enter the crypto market, Novogratz emphasized that the Bitcoin price will likely reach a 30 percent increase by the end of 2018.
According to Coinbase’s Technology Director, Balaji Srinivasan, he gained significant confidence in Bitcoin and the crypto market after it survived the fall of 2011. Crypto’s resilience and its ability to recover from major corrections demonstrated market potential to investors.
The 2018 correction had a similar impact on the market. Although many investors were negatively affected by the fall of 69% of the price of Bitcoin, in the last eight months, the market has seen some of the most positive news in its history.
Starting with Goldman Sachs, Citigroup and Morgan Stanley developing reliable crypto custody solutions, Bakkt, Nasdaq and many other regulated financial institutions in Japan and South Korea have begun to find ways to support the crypto market.
More recently, Brazil’s largest independent brokerage firm announced plans to integrate a Bitcoin and Ethereum stock exchange in the coming months, after receiving government support that opened an investigation into the country’s major banks amid accusations that The banks have not been providing enough banking services to the crypto bags.
The bubble-fall phase of Bitcoin and the crypto market was from January to July, and as the market has done since 2011, it is expected that the crypto-currency market will recover. Compared to last year, in terms of regulation, infrastructure and activity of developers, the cryptocurrency and blockchain sector has improved to unprecedented levels.
Increase in developer activity
Ben Horowitz, co-founder of Andreessen Horowitz (A16Z), a venture capital firm considered one of the most successful investment companies focused on technology, said that the activity of developers in the block chain sector resonates similar to the Internet in the nineties.
Horowitz explained that he has not seen such a high level of development activity in a single industry from the Internet, and considering that cryptocurrencies and blockchain networks are essentially computer networks, the exponential increase in the project development activity of Block chains is a positive indicator of growth.
“I think there’s probably more developer activity in the crypto than in anything we’ve seen from the Internet and the right way to think about it is that it’s a new computing platform.” Once every one or two decades, a new one appears. IT platform What is deceptive is that when the new platform at that time is generally worse in most ways than the previous platform, but has some new capabilities. “
Ben Horowitz, the co-founder of Andreessen Horowitz
In a study published in 2017, JP Vergne, a professor at the Ivey Business School, revealed that developer activity is the most accurate indicator of cryptocurrency exchange rate trends.
Based on the market trend since 2011 and its ability to recover to new historical highs after a major correction, it is very likely – given the high activity of developers around large blockchain networks – that the cryptocurrency market recover by the end of this year, as many experts predict.
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