Top Analysts Look At Past Bitcoin Price Cycles To Predict the Return of Volatility

The cryptocurrency bear market continued in October, causing these innovative assets to trend lower as they fluctuated within a modest range.

Investors have adopted a “‘wait and see’ approach,” noted analyst Joe DiPasquale, which has caused several of these digital assets to trade range-bound.

Several major cryptocurrencies suffered losses during the month, and the broader digital currency market lost value. However, these declines were modest compared to those of several other periods.

The overall digital currency market lost close to 8% during the month, according to the MVIS CryptoCompare Digital Assets 100 Index (MVDA), a key benchmark based on the value of the top 100 largest digital assets.

Bitcoin

Bitcoin held up reasonably well, peaking at $7,234.83 roughly halfway through the month, a roughly 9.8% increase from the digital asset’s starting price of $6,589.36, additional CryptoCompare data reveals. Bitcoin later retreated, erasing its gains for the month and closing the period 3.9% lower at $6,332.24.

Bitcoin Cash

Bitcoin cash, a fork of the original bitcoin, did not fare as well, experiencing some notable fluctuations and for the most part following a downward trend. The altcoin fell more than 20% in October, finishing the month at $424.16 after starting the period at $534.33.

XRP

XRP, the digital token created by Ripple’s founders, also suffered a rough month, losing more than 30% of its value in a matter of weeks. The digital asset’s price dropped to as little as $0.3761 on October 11, roughly 35% below its price of $0.5767 on October 1. The XRP later rebounded, cutting some of its losses but still finishing the month down 21.7% at $0.4513.

Ether

Ether, the second-largest digital currency by market capitalization (market cap) at the time of report, also suffered some notable losses, declining more than 18% during the first few weeks of October.

As a result, the price of ether fell to $186.88 on October 11, compared to $229.09 at the start of the month. The digital currency proceeded to rebound in the coming weeks, finishing the period at $197.41, a 13.8% loss for the month.

EOS

EOS, a digital currency linked to a platform used for decentralized applications, had a relatively stable month, experiencing modest declines during October. The EOS digital asset fell to $5.00 on October 11, down more than 11% from its opening price of $5.65.

The digital currency then recovered, eliminating some of its losses and finishing the month at $5.25. At this price, it was down more than 7% for the month.

Crypto Bear Market

At this point, the question of everyone’s mind is “When will the bear market in digital currencies end?”

The broader market trend could last another 12-18 months, predicted Arthur Hayes, co-founder and CEO of Seychelles-based cryptocurrency exchange BitMEX, told Yahoo Finance UK.

When explaining this forecast, he pointed to past bear markets.

“I’m just basing it off my previous experience. I started in bitcoin in 2013 when the price went from $250 to $1,300 and then 2014 to 2015 was sort of the nuclear bear market. Price crashed, volume crashed — very, very difficult to make money.”

When asked about this prediction by CryptoGlobe, most analysts disagreed. One market observer in particular who did agree with Hayes’ forecast of a sustained bear market was Eric Ervin, CEO of Blockforce Capital.

“We agree with the overall sentiment of Arthur’s comment,” said Ervin. Our current bear market has not been unusually long, he asserted. Ervin added:

Since 2010, there have been 4 bull cycles followed by 4 bear cycles. The average bull market lasts 449 days, and bear markets have lasted an average of 306 days, a ratio of 1.47. The last bull market lasted 818 days, so by this methodology our bear market length should be about 557 days, or an additional 241 days to the current 316 day bear market.

Cryptocurrency bull vs bear cycles

“The previous bitcoin bull markets were caused by both speculation and believers, and we feel confident that the next catalyst for a bull market will be institutional adoption,” he noted.

Optimistic Predictions

Other analysts offered rosier views on the digital currency markets. DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital, described bitcoin’s “stability around the $6,000 level” as a “great sign,” emphasizing that it gives the digital asset “plenty of room to shoot up in positive market conditions.”

“As for the bear market lasting another 12 - 18 months, we don't believe that the market is going to follow such a schedule,” he stated.

DiPasquale emphasized that the market’s future direction “depends on positive developments, and the next couple of months are going to be interesting due to the launch of Bitcoin settled futures, new custody services, more institutional investments flowing into crypto and progress in terms of ETF proposals.”

Technical Analysis

Digital currencies could break out of their relative malaise soon, at least according to technical analysis performed by Jon Pearlstone, publisher of the newsletter CryptoPatterns.

“October through December are usually the most volatile time period for most markets (see most 2017 crypto charts as a good example) so timing says we will see a move out of the current price range and increased volatility sooner than later,” he noted.

“When the current price range breaks ‘for real’ expect strong volume and high volatility with the first upside target at $7250 and a test of $5000 if we break down below 2018 lows,” said Pearlstone.

Sentiment Data

Another helpful resource for predicting the market’s future movements is sentiment data, which can be calculated by culling information from platforms like Twitter and determining whether it is positive or negative.

Cryptocurrency analytics platform The TIE supplied this exact information, which is forward-looking and predictive in nature.

“We generated monthly sentiment scores from 0-100 and we charted out the correlation between the change in monthly sentiment vs. the change in overall crypto market cap,” explained Joshua Frank, co-founder of The TIE. We “saw an extremely strong correlation between the two variables,” he added.

Cryptocurrency Sentiment DataSource: The TIE

Frank stated:

“For October we saw a 42% increase in sentiment meaning that we are predicting positive price movement in the overall Crypto market in November. The correlation between the change in coin sentiment and change in overall market cap is greater than .5 which is tremendously high.”

As for whether digital currencies will break free of their malaise in November, only time will tell. One thing we do know is that countless eyes will be watching.

Billionaire Novogratz: Altcoins Won't Pump Like In 2017 Bull Run, Bitcoin Will Dominate

It appears that cryptocurrency prices have finally begun to recover after enduring an extended bear market which lasted throughout 2018.

As the market capitalization of Bitcoin (BTC) and other major cryptoassets continues to rise, several analysts have been drawing comparisons between what they’re seeing in the current market and what they observed during the historic bull market of late 2017 and early 2018.

Commenting on the recent crypto market price movements via Twitter, Ran NeuNer, the host of the CNBC Africa Trader show, remarked:

The market is running but we still haven’t seen the crazy alt pumps, pumps where coins do 40% in a day...is it coming?

Bitcoin To “Outperform” All Other Cryptos “This Time”

As the bitcoin price begins to recover, there have been many predictions made regarding the anticipated performance of altcoins. Twitter user “Crypto Bitlord” (@Crypto_Bitlord), a widely-followed digital asset market analyst, believes XRP, which currently has a market cap of around $16.3 billion, may trade as high as $10.

However, prominent crypto investor Michael Novogratz believes that digital asset traders are a lot smarter this time, when compared to some of the bad investment decisions they might have made during the initial coin offering (ICO) craze of 2017.

Novogratz, who’s the founder and CEO of Galaxy Digital, a full-service crypto merchant bank, has predicted that in this market run, Bitcoin will “outperform” all other cryptoassets.

On May 16th, 2019, the Bitcoin price surged to a 2019 high of $8,373 according to CryptoCompare data. In response to bitcoin’s recent price movements, Juan Villaverde, the Chief Analyst at Weiss Crypto Ratings, told CryptoGlobe: 

Bitcoin could fall to as low as $4,400. But [if] it does, it will be the best Bitcoin buying opportunity since 2015.

“More Good News For New Bitcoin Users”

Villaverde, an econometrician and mathematician focused on developing various crypto index models at Weiss Ratings, believes bitcoin would be a great buy at a lower price (as suggested above) because of the following reasons:

  • “The usage of Bitcoin is near all-time highs – 450,000 transactions per day. That’s up from a low of 150,000 in April of 2018 and approaching the all-time high of 490,000 in December of 2017.”
  • “Despite the high transaction volume, fees on the Bitcoin network are at their lowest levels since August of 2017 – more good news for users.”
  • “The Bitcoin block size is now greater than ever before, thanks to the Segwit technology upgrade.”

Villaverde further noted that the predictions are “based on studying the time patterns in Bitcoin's rises and falls throughout its 9 year trading history.” He explained that the time patterns have been analyzed by using an “algorithm-based market cycles model.”

The Chief Analyst at Weiss Ratings also mentioned that the bear market “ended on December 15th 2018 and the model confirmed this shift in trend on March 26th of this year.”

He added:

Then, after the rally that took place starting on April 25th, the same model told me a new bull market was now underway. The same model indicated a 30% to 45% correction due as of late April-early May and we seem to be experiencing that right now.