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Bitcoin’s Sunset and Sunrise Within a Year. What Happens Now?

Price Predictions
Tue, 11/27/2018 - 12:33
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  • This November is different as BTC’s price has plummeted to the recent level of $3,800 from around $18,000 in January 2018, having lost about 78% of its value

Cover image via U.Today

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

Contents

Bitcoin had an amazing price action in November of 2017, as its price went from $5,300 in early November of 2017 to almost $12,000 by end of November 2017, and one month later during December 2017, the price reached its all-time high around $20,000.

This November is different, though, as its price has plummeted to the recent level of $3,800 from around $18,000 in January 2018, having lost about 78% of its value. So, from sunset to sunrise, in this article we will analyze the main factors that caused this huge decline on a yield-to-date basis.

Bitcoin’s Monthly and Weekly Charts

Bitcoin’s Monthly and Weekly Charts

Bitcoin’s Monthly and Weekly Charts

Top Factors Influencing Bitcoin’s Price and Value

  1. There is not an easy way to calculate the intrinsic value.
  2. Taxation and regulatory challenges.
  3. Artificial, very large demand for energy, environmental issues.
  4. Economic effects and slow transactions.
  5. Long-term security concerns of its hashing algorithm and huge transaction fees.
  6. Security concerns against theft.
  7. Not an easy way for financial transactions to people who are technologically-savvy
  8. Requires knowledge about computer security
  9. It is slow and not very practical in daily retail transactions
  10. Lack of protection against fraudsters, scalability problems

What are the business prospects of Bitcoin now?

This collapse of Bitcoin’s price within one year reflects the change in the perception of investors, traders, and business acumen about the true prospects of the cryptocurrency. Its main competitive advantage includes being the first decentralized online digital currency and no need for a central bank. An alternative to traditional fiat currencies has failed to persuade the global investing and financial community so far, and this is solely based on its price reflecting the supply and demand levels.

The main concept that Bitcoin would be a revolution or an evolution in the global financial system has yet to materialize, and it is now very uncertain whether this scenario will ever occur.

Lack of regulation creates a very risky business and financial environment

The lack of regulation and very volatile trading price action makes Bitcoin not a suitable form of investment for many types of investors or investment funds. “Due to the lack of regulatory oversight, scams and market manipulation are commonplace.”

Legislators have a lot of work to do to avoid any fraudulent situations in the future, and due diligence in an extensive form is a requirement in the cryptocurrency market for a sophisticated investor.

What is the key problem for Bitcoin?

All the mentioned factors are very important for the future of Bitcoin. But the transition from its sunset to its most recent sunrise is due to one major factor, related to business and economic reasons: Its lack of broad acceptance and ease of use in daily business and retail transactions.

The elementary economic law that explains at first the price of any financial asset is the law of supply and demand. As of January 2018, and up to now, history has shown that there is excessive supply and no demand for Bitcoin. Technical analysis reflects this fundamental principle. For Bitcoin to move to significant price levels, this imbalance between supply and demand must change. Otherwise, any rallies will be vulnerable to speculative trends and profit taking.

About the author

Stavros Georgiadis - CFA Charterholder, Economist, Forex market trader, US stock market financial analyst.

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  • Can Bitcoin (BTC), Ethereum (ETH), and XRP recover fast from yesterday's dump?

Cover image via www.tradingview.com

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

As expected, a sharp decline of the cryptocurrency market has occurred. The rates for the majority of prospective coins have gone down, and all of them are now in the red.

Top 10 coins by Coinstats
Top 10 coins by Coinstats

Below are the main features for Bitcoin (BTC), Ethereum (ETH), and XRP:

Name

Ticker

Market Cap

Price 

Volume (24H)

Change (24H)

Bitcoin

BTC

$114,625,532,228

$6,266.60

$34,497,792,526

-6.13%

Ethereum

ETH

$14,204,254,634

$128.80

$11,469,005,003

-5.80%

XRP

XRP

$7,431,913,709

$0.169268

$2,702,595,687

-3.89%

BTC/USD 

Our most recent Bitcoin (BTC) price forecast came true as the growth was not accompanied by the trading volume. Instead, a sharp decline took its place to $6,000.

BTC/USD chart by TradingView
BTC/USD chart by TradingView

Looking at the 4H chart, the main crypto is currently trending sideways despite yesterday's decline. The $6,000 level serves as strong support based on the high buying volume.

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In this case, the rate is unlikely to fix below this area. As a short-term projection, Bitcoin (BTC) is about to trade between the between $6,000-$6,350 range, which is mentioned on the chart.

At press time, Bitcoin was trading at $6,252.

ETH/USD

Ethereum (ETH) has accompanied Bitcoin (BTC) concerning yesterday's decline. The decrease in price for the main altcoin has constituted 5.47%.

ETH/USD chart by TradingView
ETH/USD chart by TradingView

Ethereum (ETH) is also unlikely to face a continued decline. According to the Bollinger Band, the coin is about to break out shortly. However, the liquidity is low on the weekends is low and a sideways trend prevails. To sum it up, Ethereum (ETH) is going to be located between its support line at $128.39 and the resistance level at $141.

At press time, Ethereum was trading at $128.16.

XRP/USD

XRP has shown the smallest price decrease compared to Bitcoin (BTC) and Ethereum (ETH). Its rate has gone down by 3.20% since yesterday.

XRP/USD chart by TradingView
XRP/USD chart by TradingView

Even though the rate of XRP has fallen the least, its trend is more bearish than Bitcoin (BTC) or Ethereum (ETH). Looking at the 4H chart, the lines of the Moving Average Convergence/Divergence (MACD) indicator has just entered into the red, confirming the presence of bears. Furthermore, the selling trading volume remains high. All in all, XRP holders might expect the rate to move near its support zone at $0.16 shortly.

At press time, XRP was trading at $0.1680.

About the author

With more than 5 years of trading, Denys has a deep knowledge of both technical and fundamental market analysis. Mainly, he has started his blog on TradingView where publishes all relevant information and make predictions about top coins.
Thus, his experience is backed up by working in top blockchain related companies such as W12, Platinum Listing & ICO Advisory, ATB Coin, and others.

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