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Crypto Outlook 2019

Bitcoin History Increases Mean-reversion Risk


According to Bloomberg research, Bitcoin and cryptocurrencies in general are expected to get more mature. The BTC price has been continuously staying above the support level of 1,500 USD. More bullish factors should come in order for the price to break through the 6,500 USD resistance level at which it Bitcoin has been traded mostly through 2018. The launch of ETF in the US would increase the strength of support, but Bitcoin is still not likely to break through the 6,500 USD level.


If the supply of tradable cryptos reaches another peak it would be an indicator of the bottoming prices. This process is seemingly starting right now. Cryptocurrency futures launched in December 2017 and the Bloomberg Galaxy Crypto Index in May 2018 brought forward increased regulation and further market adoption. With Bitcoin reaching 3,400 USD, the average yearly price would be around 1,800 USD.



Technical Analysis Points to Lower Levels of Support

Indicators point to Bitcoin reaching the bottom


Record-High Shorts and Low Volatility. In 2019, Bitcoin is expected to form a base for recovery, but it will be at lower levels. Short-term indicators point to possible sharp rallies, however, the overall volatility most likely will be pretty low.


2018 ending below 2017's average price of $3,950 points to further weakness. In order for Bitcoins Foundation to solidify, this indicator should come along with new heights and lows in volatility and price momentum.


The graph has reached two thirds, record shorts and there’s a steep discount below the 50-week average, which points to the possible sharp rallies in the future. 180-day volatility still has a long way to go for the basing process to become more sustained. The history lessons show that low volatility is the number one indicator of bottom.


According to our estimation, which covers data from Tradingview.com and CBOE and CME futures, Bitcoin shorts have reached a new record. At the same time, there is a biggest annual mean price discount since January 2015 when there was the previous bottom. All this points to the fact that the market is oversold. On December 14th, the discount was equal to 41% matching the same index of 2011 and 2015.


Bitcoin volatility is to reach new lows in 2019


The 180-day measure made in the middle of December resulted in 64% which is still very far from the historical low of 41% from October 2015. At that time, Bitcoin surged by 36% showing the best results of the year and the level of volatility marked the beginning of the next bull run that peaked in 2017. The speed of that run will hardly be repeated as Bitcoin gets more mature and mainstream with many new trading tools appearing in the market.

The highest peak of volatility during the 3-year timeframe was in Q1 with the substantial level of speculation in the background. When volatility decreases, it’s a sign that the market gets more mature moving from a speculative digital asset to a real store of value.



NVT set to dip into the bottom in 2019


The NVT ratio points to Bitcoin moving away from the bear market. If you divide the pace of the plunge in the 30-day average of Bitcoin's market capitalization by the estimated transaction value from Blockchain.com, you will see that such and index was last observed by the end of 2014-15 price decline.


The lowest levels were reached in January, but there was no market reversal up until October. Now as the market is much more mature, the speed of price recovery will hardly be repeated at the same level.


The process of base-building will take much longer. An NTV close to 130 is far below its peak of 200+ in October, but it’s still above typical post-bear-market lows that are usually equal to 40.


Bitcoin-Address Demand Proxy Stabilizing Lower


As the market is unable to stay above 2017 lows in unique Bitcoin addresses, it serves as an indicator of prices getting even lower in 2019. According to Blockchain.com, the 30-day average of these addresses has finally recovered from the most acute decline in 2009. However, it still can’t break through resistance.

The demand for new addresses has been growing all through 2018, though. It shows that the prices were just too elevated. The Bitcoin price and the MVIS CryptoCompare Digital Assets 100 index are most likely getting more stable at a closer parity to addresses, a demand proxy for the broad market.



Crypto Reshuffling and Culling Likely With Lower Prices in 2019


All through 2018 there has been a trend towards decrease in prices and volatility and the issuing of new stable coins. In our opinion, 2019 will be practically the same. Tether, one of the eldest stablecoins in the market, with its increasing market capitalization is a good indicator of stability that the market needs so much.



In our opinion, the average price of Bitcoin is yet to see its lowest in 2019 with the total supply of cryptocurrencies reduced so much. 2015 was the only year when the price was lower while the number all cryptocurrencies increased according to the data available at coinmarketcap.com. As the market gets more mature, weaker cryptocurrencies will most likely be removed as well as the disparity between technology adoption and the hype around it.


If you check the top of coinmarketcap 5 years ago you will see that there are only 3 cryptocurrencies is that still hold their positions: Bitcoin, XRP and Litecoin. Half of those that were in the top 10 for the last 6 months are still there. By the end of 2019, only a small part of projects that are currently listed will still be afloat.

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