In-Depth Crypto Market Analysis For January 1, 2019

The Bitcoin and cryptocurrency markets are relatively calm today on January 1, 2019. The price of Bitcoin is oscillating in a narrow trading range between USD 3,670 and USD 3,750, yielding a market cap near USD 65 billion. Ethereum has declined a couple of dollars to USD 135, with a market cap of USD 14 billion, although activity is expected to pick up in the Ether market in the coming 2 weeks as the Constantinople hard fork approaches. Litecoin is near USD 31 with a market cap of USD 1.8 billion, with the slightest of downtrends in the day.

The only major cryptocurrencies observing a more significant decrease today are privacy oriented coins like Monero, Zcash, and Dash, which are all down 2%. Some of the blockchain company tokens like Binance Coin, Maker, Tezos, VeChain, OmiseGo, and Basic Attention Token are seeing losses of 3% or more. It is quite common for tokens to fall more drastically than major cryptocurrencies on down days.

One serious outlier today is Paragon (PRG), the token of a marijuana oriented blockchain company. PRG is undergoing an extreme pump and dump, with the price rising from USD 0.11 to USD 10.28, and now crashing to USD 1.27 with the decline continuing, all in less than a day. PRG is only listed on decentralized exchanges (DEX), which are ripe for pumps and dumps since they have relatively low volume and little oversight.

The stock market in the United States saw some gains on New Year’s Eve at the end of a volatile trading session, and this coincided with Bitcoin dropping from USD 3,800 to as low as USD 3,630. The stock markets are closed for trading on New Year’s Day, and perhaps most cryptocurrency traders are taking the day off too since the movements of 1-2% for most major cryptocurrencies is less volatility than usual.

There has been an increased correlation noticed between the stock market and the Bitcoin market. It is theorized that Bitcoin can be used as a safe haven asset during times of trouble on the stock market, since Bitcoin is independent of the stock market. This is perhaps finally being observed as 2018 was by far the worst year for the stock market since Bitcoin was created. If this effect holds true then the crypto markets would be expected to decline on days that stocks go up, and a crypto rally would be expected on days that stocks go down.

The Crypto Market Is Much Healthier Today Than 1 Year Ago

Although prices of cryptocurrencies are much lower today than on New Year’s Day 2018, with Bitcoin being below USD 4,000 versus in excess of USD 15,000, the market is much healthier. On New Year’s Day 2018 the Bitcoin and crypto markets were a bursting bubble, and most investments that occurred 1 year ago led to heavy losses. Now the crypto market is possibly close to a bottom after an entire year of heavy losses. Numerous tokens collapsed in price during 2018, leaving only the tokens attached to the strongest blockchain companies as major cryptocurrencies. Essentially, only the most rugged and unique blockchain companies have survived, and these are the companies which have the best potential long-term.

Before it was thought that USD 5,800 was a true bottom for Bitcoin since that was a level which was approached multiple times during 2018, but not breached until November when Bitcoin cash forked. During the middle of December, Bitcoin went as low as USD 3,100 but has since then pulled back off lows despite negative market sentiment.

It is possible that Bitcoin will retest the USD 3,000 level, and it is hard to pinpoint where exactly the bottom is. One thing that is true is Bitcoin has always returned to its all-time highs and exceeded them given enough time, although it can take 2-3 years for that to occur. The current Bitcoin bear market is only a year old, and if past trends hold true, then 2019 could be a year of consolidation and relatively stable prices, mixed with some volatile months, as the bear market continues. It would be unusual for Bitcoin to suddenly recover after only 1 year of bear market conditions.

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