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Bitcoin Price Prediction Update And Forecast For Autumn 2018

Author: Martin Moni
Martin Moni
All publications of the author

For most of the year, Bitcoin has been wallowing below $10,000 unlike what many people, including us, predicted. The initial drop in prices came early in the year from the coin’s all-time high of about $20,000. Very few people thought this coin could be unable to regain its past glory after so many months but, alas, there has been very little change. However, things tend to change in the autumn as demand for cryptocurrencies increases, so we thought we could provide some insight into the coin’s expected performance this season.

What has been holding Bitcoin back?

The strongest surge in prices was seen between the 14th of November 2017 and the 17th of December 2017 as you can see from the Bitcoin price chart. During this period, the price of Bitcoin shot up from just over $6,500 to just under $20,000. That was about a 200% increase within a month? Naturally, everyone expected that there would be some correction because clearly this was a bubble, and the bubble did indeed come when prices fell back to the $12,500 region by the end of the year. Since then, there have been further declines into the $5,000 to $6,000 range where this coin has remained over the past few weeks. (Bitcoin Cash Vs. Bitcoin: Confrontation Forecast in 2018)

In order to understand why Bitcoin has been so underwhelming for most of the year, we have to look at both the technical and fundamental factors that are affecting its price. We’re sure everyone has their own preference, but as we saw in a previous article, both of these forms of analysis have their merits and need to be combined. In the end, you shall see that they both indeed work together to help create more insightful predictions. (How about we try: Comparing fundamental and technical analysis)

Technical analysis of Bitcoin prices for 2018

In the image below, you can see how the price of Bitcoin was influenced by technical factors both before and after the surge. Pivot points are the first thing you’re going to notice from the chart as they mark the most important price levels based on past performance and also psychological levels. (If you didn’t know, this is: All you need to know about pivot points)

From the image above, the first major level of support Bitcoin finds after reaching the all-time high is at about $12,500. This level was tested 3 times proving that it was indeed a strong level of support mainly because of the psychological aspect of it. In the middle of January, though, this support was broken and prices fell to the next support at $10,000 again for its psychological aspect – people like rounded numbers. Another reason why prices fell below the first support level was because of the 20-day simple moving average. This SMA had been crucial all through the preceding price surge, but as soon as it was crossed to the downside, it became a bearish indicator. (Here is the: Forex strategy on based on MAs)

There was a lot of support above the $12,500, though, thanks to the 100-day SMA that was still bullish, and you can see that there were a lot of doji candles formed in this area. As we described candlestick patterns in a previous article, these show a lot of indecision in the markets as bulls and bears battle for control. However, in the end the bears won the struggle and this moment is marked by the 20-day SMA crossing the 100-day SMA to the downside. This is usually referred to as the death cross in stock markets and indicates extremely bearish momentum. This change in market sentiment is clear when prices subsequently fell by 100% from $12,300 to $6,100. (These are the: 7 Powerful Candlestick Patterns to Learn and Understand)

Since then, prices have consistently remained below the 100-day SMA, only occasionally crossing above it but never staying above it for more than a week before being pushed back down. This kind of activity on the charts indicates that there is an overwhelming bearish market sentiment, and that is what has been keeping this particular coin at the levels we saw in the autumn of 2017. (These are the most influential: Forex market sentiment indicators)

We can also use the same technical analysis to try and forecast how Bitcoin will perform in the autumn of 2018. In the image below, you can see that all through the past 8 months or so, the support level at the $6,000 region has held strong and has been the only thing keeping Bitcoin prices from going even lower. Additionally, prices have been declining due to the pressure of the declining trend line indicated in red. These two lines have formed a descending triangle, which usually spells doom for the asset. From what this chart shows, Bitcoin prices will keep going down all through autumn unless there is some big news to find from the fundamental analysis. (Know all there is on the: Triangles Forex trading strategy)

Fundamental analysis of Bitcoin prices for 2018

Of course, in order to define why Bitcoin prices at any particular time, you will need to know what was happening in the actual news and not just the Forex charts online. At first, the value of Bitcoin fell from its all-time high because it was in bubble territory. As we mentioned earlier, people like rounded numbers and $20,000 is pretty well rounded. Therefore, many of the investors had placed their take profit levels at this point knowing they would have already made a killing. When these investors covered their positions, the bears entered and returned the value of the asset back to its accurate value. (Have you ever wondered: What Would Happen To Bitcoin Price When It Is All Mined?)

While this explains the initial decline in prices that occurred toward the end of 2017, it was actually news on the economic calendar Forex that caused the largest decline in prices. In January, regulators in South Korea were pushing to have cryptocurrency trading banned altogether in the country. At the time, South Korea was among the most influential markets for crypto, with more than 5% of all transactions being carried out using the South Korean won. Following similar measures in China back in September 2017, investors were legitimately concerned the ban would go through and they naturally sold a lot of their Bitcoin. (Have you ever wondered: Which Are The Most Influential Cryptocurrency Markets By Country?)

In addition to this, there had been a massive hack at the Coincheck exchange at the beginning of the year. $530 million worth of NEM coins were stolen from the exchange causing the coin itself to lose 14% of its value. Moreover, since Coincheck is based in Japan, investors were afraid it could be a similar situation to the Mt Gox incident of 2013. These are what contributed to the drop from $17,000 to $6,000 between the 7th of January to the 7th of February 2018. (These are: The Most Prominent Cryptocurrency Hacks and Scams You Should)

Following these events, Bitcoin once again recovered its price to even reach $11,000 because South Korean Forex regulators finally passed legislation on crypto trading. In the end, these rules were not as draconian as those in China, and trading volume from South Korea once again picked up significantly. But just as Bitcoin was coming up for air did Google hit cryptocurrencies with a ban on advertisements. The company believed that many of the adverts were of fraudulent coins and chose to summarily ban all crypto ads as they worked on a more refined solution. (Out of fear: Cryptocurrency Ads Banned From Google And Social Media)

Following these drastic spikes and plunges in the price of Bitcoin, the coin has more or less tapered off in value to remain between the $8,000 to $6,000 range although at a declining rate. Some of the good news holding up the coin has been the introduction if institutional money with companies indicating interest in the technology. Moreover, companies like PayPal are also rumoured to be interested in a partnership, although it is still not 100% clear whether this will happen. On the other hand, Bitcoin still faces a major hurdle that is the limit on the number of transactions. At the moment, only about 3 transactions can be processed in a second, which is very low. Developers have been working on an update called the Lightning Network that is supposed to help eliminate this problem but it is yet to be implemented and not all developers even believe it will work perfectly. (Some of the: Alternative Cryptocurrencies beside Bitcoin to invest in)

As it stands now, there really is nothing interesting happening in the crypto world, and that is not good news for Bitcoin that relies heavily on public sentiment. Remember that cryptocurrency is very unlike other financial markets like the stock market or indices that have clear trends set over decades. We are thus very pessimistic about Bitcoin this autumn and it will most likely not go above $7,000 this season. Perhaps prices will even fall below $6,000 in the winter when prices break out of the descending triangle. (Do you know: What will happen to Bitcoin in 2018?)

What the experts believe

Making predictions about cryptocurrency and Bitcoin in particular is a very dangerous game, but it doesn’t hurt to know what other experts think about it. Here, the opinions are split with enthusiasts hailing the coin and predicting huge figures for the year 2018. One of the most vocal and trusted voice in the crypto sphere is John McAfee. In a tweet, he indicated that back in 2017, he had predicted Bitcoin to end the year at $5,000. Considering this was back when Bitcoin was hovering around $1,000, his predictions were greatly underestimated and he was proven wrong. Now he is claiming that Bitcoin will go up to $20,000 by the end of 2018. This is certainly possible because we did see such a spike in prices last year from November. (Do you know: What Is The Future Of Cryptocurrency In Finance?)

Another vocal and trusted expert in this area is Cameron Winklevoss, one of the Winklevoss twins. These two were obviously smart to get in on the action early and have become billionaires as a result. They think Bitcoin will continue to go up, but their predictions were prejudiced as they were hoping the Bitcoin ETF they applied for would be approved by the SEC. It wasn’t. Fortunately, there are still some notable figures in finance like Tim Draper and Tom Lee that have confidence in Bitcoin going up rather than down. (Investing In Cryptocurrencies: Watch These 5 Profitable Cryptocurrencies)

There are others, though, like Kenneth Rogoff think Bitcoin will go down to $100 and not $100,000. His opinions may be a bit too dramatic perhaps because he is completely against cryptocurrencies, but perhaps he has a point. If there’s one thing we’ve learned is that you ought never to ignore that one lonely voice in the desert. (Does BTC Stand A Chance To Becoming The Worldwide currency?)

Our take

By most accounts, Bitcoin is expected to increase in price this year and in the years to come. However, here we are only interested in the price predictions for this autumn, and there aren’t any hopeful signs. Both our technical and fundamental analyses show that there is still overwhelming bearish sentiment in the crypto markets in general, which means that Bitcoin is not coming up for air this autumn. Perhaps there is still some hope toward the end of the year, but so far keep looking for opportunities to go short on this coin. (In the beginning, we asked: Will Cryptocurrencies Recover From Their Price Slump In 2018?)

 

If you want to know how the markets reacted after Google announced its ban on crypto ads, just see in this short video how big the news was:

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Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.
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