2018 has been a devastating year for Bitcoin (BTC) and altcoins alike. BTC is currently down over 80% from its all-time high — $20,000. However, some analysts are drawing uncanny parallels between November’s recent decline, and the collapse at 2015’s commencement, which proceeded to the near 3-year bull run for cryptocurrencies at large.

Even Candlesticks Have Doppelgängers

Since the start of 2018, BTC has fallen around 80% from its all-time high, established in late-December 2017 at the peak of ‘speculmania’. Although the exact prices ranges are drastically different, many pundits have exclaimed that crypto’s recent leg lower is similar to the market’s decline in the 2014 to 2015 timespan.

The drawdowns aren’t the main comparison analysts are making, however.

In 2015’s earliest weeks, Bitcoin fell to around $180, denoted by a 43% decline, which then saw the digital currency consolidate prior to shooting up to its 2017 highs. BTC has recently seen a near identical 43% decline (between November 7th – 25th 2018), falling from $6,598 to $3,773 (according to Live Coin Watch). This movement has prompted analysts to claim that cryptocurrencies could see a stellar performance in the years to come.

(Chart provided by finance.yahoo.com)

Bitcoin Technical Analysis

On the BTC/USD weekly chart shown above, the asset’s Relative Strength Index (RSI) is also showing similarities. Prior to the 2015 bull run, the RSI pierced the threshold into oversold territory. A position we’re currently close to.

Recently, after battling the resistance of the 50-day SMA (Simple Moving Average), we’ve just witnessed BTC take yet another tumble, crossing back into oversold territory on the RSI on the BTC/USD daily chart.

(Chart provided by finance.yahoo.com)

Technical strategist at Fundstrat Global Advisors, Rob Sluymer, was quoted saying:

“In contrast to bounces that have developed through 2018, weekly RSI [relative strength index] is now at levels not seen since BTC’s last bear market low in early 2015 and BTC is showing very early evidence of responding to its long-term uptrend after three major downside moves through 2018.”

Tom Lee, Sluymer’s colleague, has been throwing around predictions for some time, recently dropping his $25,000 end of year price prediction for BTC to $15,000. Given the current sentiment that is thrown around the cryptocurrency market, Lee’s predictions may seem impossible to many. However, if history does repeat itself, Lee’s prediction targets may be achieved, even sooner than we may think.

Lee recently tweeted showing he’s still bullish on digital currency, exclaiming that despite market lows, Bitcoin is far from broken. Issuing a comment to his well-followed social media feed, he wrote:

A reminder that as painful as the #cryptobear market has been, and as it feels like the whole space is getting massacred, Bitcoin is not broken. Growth in wallets (50mm—>5b?) plus becoming an asset class (<4% owned by institutions) means LONG runway for future growth. https://t.co/o2DTteZZKk — Thomas Lee (@fundstrat) November 29, 2018

Yet, many are still skeptical. Cynics have suggested that Bitcoin’s attempts at breaking out after the November 25th, 2018 low will be short-lived — or what CrackedMarket blog’s Jani Ziedins calls a “dead-cat bounce”:

“Most likely relief rallies will carry us back above $5k over the next week or two… But this is nothing more than a dead-cat bounce and bitcoin is still not investable for the long term.”

Despite November’s fall, analytical search engine tool Google Trends has been showing that interest in Bitcoin has risen to notable levels — ones that we haven’t seen since June.

(Chart from trends.google.com)

Other interesting comparisons include Bitcoin’s market behavior in comparison that of the ‘DotCom Bubble’, suggesting that nascent digital currencies could soar, potentially past its former all-time highs.

Interesting comparison between the 'Dot Com Bubble' & the 'Crypto Bubble' Current cryptocurrency bear market trend is not even close As adoption of crypto & technologies continue to improve day-by-day, we will soon enough see a quantum leap based on solid foundations – not FOMO pic.twitter.com/wHDvMgatKF — LiveCoinWatch • Crypto Analytics (@LiveCoinWatch) September 26, 2018

The Only Way Is Up?

Whilst Fundstrat’s Sluymer is quoted saying: “Our expectation is that BTC is in the very early stages of establishing a multi-quarter bottoming process that is likely to extend well into mid-2019,” the year to come is already looking to be great for the cryptosphere.

Q1 2019 is expected to see Malaysia’s Finance Minister implement regulation within the country’s cryptocurrency and ICO sector. Also, Bakkt, an initiative backed by the Intercontinental Exchange (NYSE parent), is slated to issued Bitcoin daily-settled, physically-backed futures on January 24th, 2019, while Nasdaq has now confirmed its plans for Bitcoin futures. The latter vehicle is expected to launch in either Q1 or Q2 2019, pending regulatory approval from the U.S.’ governmental agencies.

My opinion is that upcoming global events could trigger fears of uncertainty in many economies. This instability could lead to the devaluation of multiple inflationary fiat currencies leaving citizens looking for alternative exchanges of value such as Bitcoin, much like they have in countries such as Turkey.

Many major markets, such as the Dow Jones (30) and S&P 500, have declined over the past weeks, somewhat due to fears of an impending bout of market turmoil. Yields on U.S. Three-Year Treasury Bonds surpassed the yields of Five-Year Treasury Bonds — a move which has happened prior to the last three recessions. This factor alone could spell disaster for the world’s financial markets.

(Chart provided by finance.yahoo.com)

If the worst comes to pass, the cryptosphere could see a monumental rise in adoption of cryptocurrencies and related technologies globally. Deflationary assets, such as BTC, could be used as an alternative store of value. Bitcoin has already been dubbed ‘gold 2.0’, with the crypto asset possessing attributes of the orange precious metal, a go-to safe haven for investors in times of turmoil.

Your Thoughts

Do you think Bitcoin will start recovering soon? Please let us know in the comments below.

I’m just hoping 2019 shows some strong upward momentum, so McAfee won’t have to eat his family jewels on national TV.

Title Image Courtesy of Evgeny Tchebotarev on Unsplash