A Place Under The New Year Tree.

What to expect from cryptocurrencies closer to the New Year’s Eve? EXMO Follow Dec 26, 2018 · 8 min read

At the end of 2017, the blockchain industry was in the midst of an unusual stir: over a couple of months, cryptocurrencies grew in prices several times. Then the situation has dramatically changed, and assets prices have fallen significantly over the past ten months. Now investors can only believe in the reiteration of last year’s scenario and wait.

If at the end of October 2017, Bitcoin cost about $ 5.5 thousand, then its price already reached $20 thousand on December 18.

Most of the Altcoins rushed right after the first cryptocurrency — they began to consistently set the historical maximums of value, day after day improving indicators.

For example, Stellar cryptocurrency showed growth of 1,300% from November to January, and the XRP token, which increased by 1,750% over the same period, later became notorious among investors who were not lucky enough to invest in an asset at the peak (now it cost almost ten times cheaper).

History

For the blockchain industry, 2018 year began extremely aggressively — the governments of large countries stated that they could no longer ignore the market, which had reached the scale requiring its urgent regulation.

Any careless words of major politicians caused a hard fall in the value of digital assets.

For example, after the South Korean Justice Minister Park Sangki spoke at a local radio station, where he talked about the government’s plans to impose a total ban on the cryptocurrency. Just an hour after the official’s announcement, the industry’s capitalization decreased by $ 100 billion, investor’s reaction was instant. It lasted for several months during 2018, and if last time the negative news could not prevent the rally of digital money, now they are echoing and aggravating the situation in the market.

Many investors who came here for quick earnings have lost interest in the industry due to the fall in the asset values. It was especially noticeable on the example of cryptocurrency exchanges. At the end of the past year, they were overcrowded and, in order not to be overload, many of them turned the registration function off, more than half of the accounts are inactive now, and trading volumes have decreased several times.

For comparison: last December, Bitcoin trading volume amounted to over $ 21 billion, and in the past few months it does not exceed even $ 4 billion. Several large cryptocurrency exchanges, like the British Coinfloor and the Brazilian Mercado Bitcoin, had to reduce staff, dismiss employees and close some departments.

It is difficult to choose the words to explain how different positions in the market are then and now. Last year, the interest and popularity of cryptocurrency increased at an incredible rate, approximately with the same acceleration they fell this year. The value of assets throughout 2017 grew steadily, and in 2018 it is continuously decreasing. In many countries the market has become more regulated now, hackers have stolen more than $ 880 million, all the largest cryptocurrency exchanges were hit in some ways.

Ethereum

In addition to the general market situation, a lot has changed in each project over time. Let’s take Ethereum as an example. Most of the ICOs held on the largest platforms for decentralized applications, their peak occurred last year, in order to take part in projects for the initial placement of tokens, many investors bought the second biggest for capitalization cryptocurrency, which, of course, supported its cost.

However, then the start-ups had to cash Ethereum to pay salaries, rent premises, develop their own projects, someone wanted to close the project and get at least some fiat money. As a result, the rate of altcoin dropped from $ 1,400 to $ 170 — more than seven times. Now cryptocurrency is no longer fundamental support in the form of ICO, so shortly, its course is unlikely to be able to reach even the mark of $ 1 thousand again.

At the same time, experts are confident that the asset value may rise to $ 350–400 in the nearest future, and will reach the level of $ 700 later. Yes, according to the expert, Ethereum will not be able to reach the previous maximums. However, it may well grow several times in a relatively short period in the nearest future, which will make good money.

In general, the market has no prerequisites to repeat the scenario of the end of 2017. Large investors still do not want to enter a very volatile market, and the small investors have either already suffered losses, or they are holding positions, but waiting for a second impulse.

It is enough to analyze the dynamics of the main cryptocurrencies throughout 2017. During this time, the market grew, and the most successful period was just the segment until October. This year stagnation of both bitcoin and altcoins occurs. This market just has no money and new ideas.

Other experts predict that now is the best conservative position to enter when Bitcoin is at the level of $ 6.5 thousand. There is a chance that by the end of December, the first cryptocurrency rate will rise above $ 7.2 thousand, and during the first quarter of 2019 the mark of $ 10 thousand will be reached, and then the long-term correction will begin again, the expert predicts.

According to the forecast, if you now invest in the #1 cryptocurrency, in the first quarter of 2019 you can increase your capital by 1.5 times. The analyst is confident that next year will be a turning point for the cryptocurrency market; if it becomes more extensive and accessible, institutional investors will start coming to the industry, which will positively affect the price of assets. Now many players are waiting, and they are preparing for the global growth in a few months.

“The situation on the cryptocurrency market now is more than negative because of the mass problems that the new type of assets could not cope with, their cost will tend to zero.” — Says an analyst from the TeleTrade Group.

He recalled that many coins have lost up to 80% of the price over the past year, the exchanges have experienced severe system problems, and regulators have shown their negative attitude to digital money.

Exchanges fevered all year. Some of them just disappeared along with the clients’ money, while others, the largest ones, faced problems with liquidity, and it was difficult for customers to Withdraw money.

Another topic is the criminalization of the ICO market. More than 90% of the placements turned out to be untenable and went into the trial stage. Disappointment — this is how you can now characterize the general mood.

The experiment with the launch of Bitcoin futures on the Chicago stock exchanges was unsuccessful: they are not suitable for investment because of manipulability and lack of transparency.

The public also sharply lost interest in cryptocurrencies, searches in search engines dropped to as it was five years ago.

Many users began to realize that cryptocurrency cannot be a regular asset from a financial point of view: there is no profitability, dividends, reporting, transparency. Hence the conclusion that in the medium term, digital money may be close to depreciating.

The impact of policies on cryptocurrency

The seasonal factor principle does not apply to the cryptocurrency market, it does not have a cyclical nature, and there are no reasons for reacting to certain news by unequivocal asset purchases. All forecasts for this industry need to take with a serious adjustment to the high probability of force majeure.

One of the reasons for keeping optimism until the end of the year, the main is the end of the calendar period. In financial markets, we will observe profit-taking on long positions of the US dollar. Which may cause an overflow of a part of investors’ funds to the cryptocurrency market. More likely, the main demand will be in Bitcoin, if we talk about preferences.

Now there is no reason to sell cryptocurrencies since the volatility is quite low for most of them, to take a long-term waiting position.

At the same time, it is worth buying digital money only after demand for these tools returns, you need to wait for current sharp fluctuations in the course.

“It may happen to update the lows by another 7–12%, warrants of strong buyers will work there, and cryptocurrency will start to grow gradually in price. This is where the best time for new injections will be” the crypto analyst suggested.

According to the expert, at the beginning of 2019, at that moment, until the investment strategies of the new year come into force, cryptocurrency will be interesting for speculation and purchases again. Now there is no reason for the long-term storage of digital money, the profit on transactions should be fixed upon reaching the target values ​​of each asset separately.

Bitcoin is on the right track

The co-founder of the EXMO cryptocurrency exchange, Edward Bark, is also positive about the situation in the industry, who is confident that today the situation in the world of digital money is much healthier than during last year’s rush. The expert recalled that at the beginning of 2018, the artificially inflated crypto bubble burst rapidly.

“I am not calling the cryptocurrency market a “soap bubble”, but the situation where people who are not related to the market see the incredible success of a company in the industry and, do not realize what is actually happening. People are making a freakishly bad product and launching it into the market. The product can exist for some time, because of the general hype and madness, but then, of course, it dies, ”said Bark.

In any financial market, this state of affairs is an omen of the bubble, as is the exponential growth in the number of average assets, the expert is sure. He called “The great news” the fact that people are losing interest in a large number of altcoins, who have no real use and community. This suggests that the focus of attention of investors and users has shifted towards quality products.

“Taking into account other trends — an active movement towards regulation and integration into the world of classical finance, I believe that we are on the right track,” the co-founder of EXMO emphasized.

Experts are fundamentally different in assessing the prospects for the cryptocurrency. Some people are sure that no growth is worth the waiting, but the overwhelming majority insist that the industry is developing and digital money has all the prospects for growth. They do not agree only with the one thing — how cryptocurrency will rise in price in a digital equivalent.

But they agree about the other thing: now is the best moment to buy digital money. We won’t see such low prices for crypto for a long time, perhaps even never again. Same, almost none of the experts disputes the fact that you can still make good money on cryptocurrencies. That is an axiom for them.

The next, 2019 will be decisive. Large companies continue to prepare the ground for the arrival of institutional investors. Judging by the news coming from various sources, the latter have already paid attention to the blockchain industry but still cannot enter because the market is too volatile, unregulated and unsafe.

The main thing is to take into account in this situation is that the cryptocurrency world is constantly changing, and the launch of such sites as Bakkt from the operator of the New York Stock Exchange Intercontinental Exchange (ICE), says that the industry has prospects.