When looking at 2018, we see the digital currency world as staring with a bang, then suffering a series of setbacks that include but are not limited to, massive cryptocurrency heists, a digital clamp down in China, global regulatory intervention, as well as a series of ETF rejections by the Securities and Exchange Commission in the US. It is not surprising that the digital currency market has suffered a series of sell-offs since March and has not recovered since. In fact, 95 percent of all cryptocurrencies are down over 70 percent in the past 9 months. Goldman Sachs and other major players have suggested that the future for crypto is in question. Note that last week, Goldman cancelled plans to open a cryptocurrency trading desk according to several news services but Goldman says this report is fake news.
As a result, many so-called crypto-traders and new crypto-experts who entered this market or ecosystem in February and March of 2018, suffered from poor performance and in some cases, their startup firms, most crypto-hedge funds suffered intolerable losses of up to 60 percent of their investments. Even a 20 percent loss would warrant the closure of an investment firm. Clearly, the threshold for pain is much higher in the crypto-world and the result is that losses of 50 to 70 percent have been recorded. Cryptocurrencies seem to have hit rock bottom.
We do not give buy and sell recommendations. However, we do technical analysis in digital coins, as well as equity, fx and bonds and look for 3-month trends in markets. Our recent studies show that after the $6,000 to $5,800 support range held despite waves negative news being priced in, the downside is solid and clearly very limited. This would indicate that Bitcoin has formed a base. In fact, a reversal followed by a break of $6,800 then $7,410 on the upside could mean that this market could extend, and possibly extend to $10,000 or higher by December, 2018.
So from a pure technical standpoint, Bitcoin and many other digital coins look strong, very strong.
So we turn to the key long-term investment rationale – fundamental change. Note that the underlying news in institutional custody, new capital flow into ICOs, and discussions by the SEC on ETFs are all net positives that will, in the coming months, result in a more stable and trusted market. Combine these factors with a stronger regulatory framework and we now see an unusual situation in which both technical indicators and fundamentals look increasingly positive.
Bitcoin could see solid performance September and October – we suggest you research and have another look at digital currencies.