The year 2018 was very noisy for the cryptocurrency (a type of encrypted currency which is called electronic money too). The bitcoin price (a kind of cryptocurrency based on Blockchain) astonishingly dropped about 73%. Its value was $13850.50 on January 1., and $3709.50 on December 31. Although Bitcoin value had a sharp drop in 2018, it is still the greatest and the most reputable cryptocurrency which is exchanged in the most widespread transactions. In the ranking carried out, Bitcoin is among ten big cryptocurrencies.
Bitcoin is, in fact, a cryptocurrency and the world payment system of no country has recognized it yet; besides, it is active on the Blockchain platform.
The blockchain is an encrypted infrastructure on which cryptocurrencies have been founded. This technology provides security in encrypted currencies. Therefore, on one can manipulate transactions records and their records are clearly available for the users. The first cryptocurrency which came to the market based on blockchain was Bitcoin.
The encrypted platform has four main advantages:
• Not being controlled by any institution or person
• Impossible to face failure and cessation
• Recording transactions in a connected network of all users
• The necessity of manipulating the whole network in case of the need to manipulate Blockchain information
Digital currency or electronic money is an encrypted currency which is called cryptocurrency too.
Bitcoin monthly price and volatilities have been in the following way in 2018:
- Bitcoin value has been $13.850.50 at the beginning of January 2018, and it was $10.265.40 at the end of it. Its monthly volatilities have been -25.88% and its annual volatilities have been -25.88%.
- Bitcoin value has been $10.266.20 at the beginning of February 2018, and it was $10.333.90 at the end of it. Its monthly volatilities have been 0.66%, and its annual volatilities have been -25.39%.
- Bitcoin value has been $10.335.10 at the beginning of March 2018, and it was $6.938.20 at the end of it. Its monthly volatilities have been -32.87% and its annual volatilities have been -49.91%.
- Bitcoin value has been $6.939.10 at the beginning of April 2018, and it was $9.245.10 at the end of it. Its monthly volatilities have been 33.23%, and its annual volatilities have been -33.25%.
- Bitcoin value has been $9.245.10 at the beginning of May 2018, and it was $7.502.60 at the end of it. Its monthly volatilities have been -18.85% and its annual volatilities have been -45.83%.
- Bitcoin value has been $7.502.50 at the beginning of June 2018, and it was $6.938.90 at the end of it. Its monthly volatilities have been -14.71% and its annual volatilities have been -53.80%.
- Bitcoin value has been $6.398.50 at the beginning of July 2018, and it was $7.729.40 at the end of it. Its monthly volatilities have been 20.80%, and its annual volatilities have been -44.19%.
- Bitcoin value has been $7.728.50 at the beginning of August 2018, and it was $7.033.80 at the end of it. Its monthly volatilities have been -8.99% and its annual volatilities have been -49.22%.
- Bitcoin value has been $7.032.40 at the beginning of September 2018, and it was $6.635.20 at the end of it. Its monthly volatilities have been -5.65% and its annual volatilities have been -52.09%.
- Bitcoin value has been $7.725.50 at the beginning of October 2018, and it was $6.365.90 at the end of it. Its monthly volatilities have been -4.06% and its annual volatilities have been -54.04%.
- Bitcoin value has been $6.365.90 at the beginning of November 2018, and it was $4.039.70 at the end of it. Its monthly volatilities have been -36.54% and its annual volatilities have been -70.83%.
- Bitcoin value has been $4.038.70 at the beginning of December 2018, and it was $3.709.50 at the end of it. Its monthly volatilities have been -8.15% and its annual volatilities have been -73.22%.
When we review the literature of Bitcoin prices, two technical developments are observed; moving average death cross and breaking support in the range of $6000.
Moving average is an important and functional index in technical analysis which helps the investor draw a better picture of price mean and price trend through removing price volatilities.
A death cross occurs when the short-term moving average is placed below its long-term level; in fact, death cross shows that falling movement is still going on.
Based on USD, Bitcoin observed the death cross of 100-day and 200-day moving averages on April 16, which emphasizes the end of recent bull market in the capital market. As the market is growing and the stock price is in a rising trend, it is idiomatically called Bull market.
Before death cross in April, the prices dropped in February and received $6000 support. After April 16, all attentions were drawn on strenuous process of the prices until it was failed nine months later on November 14.
2018 finished with the Bitcoin value of $3747 which is considered the worst performance during the past 12 months for the bitcoin. In 2014, Bitcoin again experienced a heavy drop of 55%; however, it logged in 2018.
Transactions volume shows the degree of the investors’ attention and interest to the stock. The traders can assess the process weakness or strength through analyzing transactions volume.
Bitcoin transactions volume had a rising trend (except May in which we faced the decrease of transactions volume) in 2017, up to the end of 2017 that Bitcoin transactions volume reached its peak, and totally, November transactions approached $70.2 billion.
We observed transaction volume and prices decrease across 2018. Monthly transactions volume was just $7.8 billion in 2018 which has dropped compared to that of November, i.e., 88%. Notwithstanding 2018 financial performance was all despair and hopelessness. In 2018, $2000 billion of Bitcoin value was exchanged, and these transactions have increased to 61% in December compared to that of last year.
There are many other tools which can be used to evaluate Bitcoin market condition in 2018 through technical analysis. One of their most popular tools is NVT ratio created by Willy Woo, a cryptocurrency researcher. These tools concentrate on different Bitcoin Blockchain metrics and their relationship with network price.
Blockchain or Blockchain, a type of information registration and report system, has encrypted data structure and it is the basic technology of cryptocurrency.
NVT, Network Value Transmitted, compares the prices with incomes ratio to value company stock price via weighing Bitcoin network value and transactions capitals value on Blockchain platform.
The ratio above 100 shows that Bitcoin Value has excelled its network value; on the contrary, the ratio below 100 points to the fact that the market shows a more realistic value for the Bitcoin. In this condition, the prices will experience fewer risks than continuous and active drops.
Bitcoin NVT ratio has been more than 100 in 2018, even in 2011, it has been more than 200 which was its highest level. So, the market enjoyed a dramatic value in which the prices and network value drop has had high probability.
At the end of 2018, Bitcoin suffered from an about 80% decrease in network value, and it fell from $280 billion to $56 billion; while its falling trend is sharp, the evaluated value fall in daily transactions on Blockchain platform stops in May, and it becomes fixed at $250 billion; therefore, it enables the NVT ratio to begin abating prices finally.
A Forward-looking View
In fact, solely regarding price and value performance of the Bitcoin network, 2018 was historically one of the worst Bitcoin years. Other metrics, like the sum of transactions volume, show a significant increase in the investors’ interest last year, while NVT ratio states that the last Bitcoin bubble is approaching total bate. All in all, 2019 will be an interesting year for Bitcoin; since valuing will be concomitant with the price decrease, and it will attempt to reach a balance through applying fundamental methods.