If you could have suggested to any crypto trader and enthusiast earlier this year that Bitcoin (BTC) would drop to current levels of $3,700 he or she might as well declared you insane. But the reality remains that we are where we are due to a few factors that will be stated below.
Current Values Had been Predicted Loosely
Heading into Thanksgiving, there was the bullish side of the argument that had postulated that the discounted values of all cryptocurrencies will lead to a bounce and have BTC at levels above $4,700. This theory had been based on the fact that the Hash Wars were over. There was also another camp that was calling for $3,000.
Earlier Predictions of the Bear Market
Veteran Bitcoin and digital analyst Willy Woo, uses the NVT signal/ratio to analyze the future of BTC. The NVT ratio that was co-created by Dmitry Kalichki and Woo, is simply the Network Valuation divided by the Transaction Value flowing through the blockchain and then smoothed using a moving average.
In an October 26th tweet, Willy Woo had used this ratio to conclude that we were in the middle of a bear market. This in turn meant that we had a few months of Bitcoin falling before declaring a bottom. The exact date of the bottom was not known but the calls were for some time between April and May 2019.
Bitcoin Cash Hash Wars Has Accelerated The Process of Reaching a Bottom
Unbeknownst to many analysts, was the storm that was the Bitcoin Cash Hash Wars that saw BTC fall from $6,300 levels only two weeks ago to current $3,700 values. This event has indeed accelerated the process of reaching the possible end of the bear market that had been predicted for mid-2019.
No Trading During the Thanksgiving Weekend
This weekend also played a part to play in the declining value of BTC. Thanksgiving is used as a marker to kick-start spending during the Holiday Season. After Thanksgiving, individuals take out their money to buy discounted items on Black Friday and Cyber Monday. There is also the pending Christmas period and New Years where spending and travelling is the norm.
It is therefore not surprising that the trade volume this weekend was low. Traders might have simply cashed out and thus contributing to the decline of BTC.
With many crypto traders either capitulating or continuing to hold, the next few weeks of the year will be crucial in determining the next course of action in the crypto markets.
To note is that there are the CME Bitcoin Futures that expire this Friday, the 30th of November. What is normally the case when these contracts expire, is that the value of BTC drops a few percentage points. However, one can argue that BTC has fallen too hard for the expiring futures contracts to make a bigger dent on its value.
In conclusion, the bear market had been predicted to last into 2019 but the emergence of the unexpected Hash Wars probably accelerated the process of reaching a bottom for BTC. The current levels had been predicted loosely but for mid next year. The next few weeks will be crucial in determining if this is indeed a bottom and before Bakkt launches on the 24th of January. Therefore, being cautious in the crypto markets moving forward might not be a bad idea.
What are your thoughts on the current levels of Bitcoin? Please let us know in the comment section below.
Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.