The month of November is now permanently etched in history of bitcoin as a dark page owing to historic decline in value since its debut. Multiple factors can be attributed to fall in value of crypto currencies; however the main reason for fall is huge volume of Bitcoin over the counter transactions by two parties who are at war over hashrate on BCH hard fork that took place at mid-November caused sharp slide in value which was further aggravated by after effects in form of regulatory crackdown, lack of retail activity and huge number of investors leaving the crypto industry in hordes which created a vacuum both in form of loss of volume and loss of activity in trading market eventually led to loss of over 40% in value in just single month.
BCH Hard Fork & Regulatory Crackdown Influenced Sharp Bitcoin Sell-Off
Trading session started for the month on neutral note as pair continued to move in range bound fashion above $6000 handle. Market volatility was already very low before the sharp decline in value of bitcoin. The price held steady within range of $6000 to $6500 handle for nearly 5 months and while there were several instance when prices climbed above $6500 mark the price action was never stable owing to lack of fundamental support which resulted in price coming back within above mentioned range limit. As investors grew tired of repeated price pattern which lacked opportunities for quick profit amid dull, long and slow paced consolidation, eager traders who are looking for new markets to push their funds into decided to limit fund flow toward bitcoin. Meanwhile lack of volatility also resulted in day traders and the speculators from last year’s crypto boom abandoning bitcoins owing to lack of investment and lack of market’s motivation to see bitcoin back near 2017 highs.
Bitcoin started to head towards lower end of price range as traders reacted dovish to news of many countries establishing specific taxes on Crypto currencies operations with most recent being France, which had created a tax rate of 30% and regulatory agencies and tax departments began identifying and enforcing tax payments on individuals identified with significant holdings in form of crypto assets. Meanwhile US SEC also began a serious crackdown on decentralized exchanges such as EtherDelta for non compliance with acceptable terms in dealing related to financial instruments. Mid- month saw sharp decline in value of bitcoin as hashrate war between miners of BCH which resulted in hard fork, saw huge volume of OTC transaction in form of Bitcoins which began with 12% decline in single trading day. As the war between two teams involved in hashrate extended across the week with miners funding their war effort in form of bitcoin to boost their infrastructure, market value of bitcoin declined steadily.
This hard fork is dark page in bitcoin’s history as decline in price of bitcoin over hashrate war nearly wiped out the entire bitcoin market to pre-historic levels while also triggering sharp sell-off in other legacy crypto-currencies wreaking havoc in global crypto currency investment sector. This move caused many miners to close shop and sell their assets to recover loss of investment as fall of bitcoin value below $4000 in second half of month increased operational costs to mine bitcoins with no profit margin. Many miners who closed shop were speculators and amateur traders who came along during bitcoin’s 2017 bull run and spent significant part of their life’s savings leaving them in huge loss. As BTC/USD had lost more than 30% with no visible signs of rally hitting bottom, any remaining retail investors gave up on trading in bitcoin.
However the pair began to see some support near mid-$3000 price range as those left in trading world of crypto was mostly large scale investors and financial investment firms with pockets huge enough to wait out the rally and reap significant gains when the currency begin’s to gain positive price action in long run. Bitcoin price began regaining lost ground on news of world’s first multi crypto currency based Exchange Traded Product’s (ETP) debut in Switzerland’s six exchanges which was made of up five major cryptocurrencies in which bitcoin had more than 50% share value. While the debut was expected to give much awaited bullish boost for bitcoin to recover from earlier losses the debut was subdued albeit successful resulting in lack of trigger for bitcoin to gain upper hand. However it did provide some level of fundamental support to Bitcoin on its recovery above $4000 mark near the end of the month.
Investors Await Official Comment From US SEC On ETF Approval
Bitcoin also saw some fund flow from institutional investors in hope of seasonal gains as Bitcoin always saw significant up move in month of December. Crypto market also saw positive news in form of South Korean law market proposing bill to promote crypto trading and crypto currency related business along with setting up of regulation to improve service offered to clients and create better business opportunities especially since South Korea is a major player in crypto currency market for nearly a decade now. Moving forward unofficial comments from various sources resulted in news hitting market that SEC may not approve Bitcoin ETF in near future owing to lack of security but market is divided as SEC has not made an official statement yet and are hopeful that SEC may approve ETF’s by end of December. Unless Bitcoin ETF is approved or any major news hits the market bitcoin is likely to remain range bound trapped between $3500 to $4500 price levels. Positive news from authentic source or fund inflow from institutional investors can also alter the course of bitcoin price action temporarily.
This article was originally posted on FX Empire
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