2019 In Review — A Look at the Cryptocurrency Markets

2019 was a good year for the crypto markets, nothing more and nothing less. It wasn’t unbelievably great like 2017, nor was it unbelievably awful like 2018 (unless you’re skilled enough to short). But even if the days of life-changing volatility are over for the crypto markets – and I’m not saying they are – crypto this past year was still able to outperform basically every other asset class in the world from bottom to top.

Bitcoin

According to the BraveNewCoin chart on TradingView (i.e., the best chart), Bitcoin rose a maximum of 312% during 2019 (and fell a maximum of 76%). Now, obviously, not many people caught the full 3x on Bitcoin, but there was still considerable potential for gain during the year.

What will this year's candle bring?BTC chart by TradingView

There is an interesting feature here on the yearly chart. The tops of the candle bodies from both 2017 and 2018, at $13,900, exactly align with the top of 2019’s wick. This is likely an important level to watch for the future: we’ll expect this level to present stiff resistance if Bitcoin should reach this level again, and a powerful bull signal if it is broken.

We can also expect the top of 2019’s candle body to be a significant level going forward. This level is sitting at $7,171, and it is perhaps no coincidence that we are seeing a healthy amount of support near here at present. Bitcoin may stand a good chance of holding here.

Looking on the monthly chart from 2019, we see another interesting confluence. Price was largely held at the beginning of 2019 at the 55-month EMA; and after topping out near $14,000, its retracement has so far been held right at the 21 EMA. This area also is confluent with the “golden pocket” Fibonacci zone, between 0.618-65.

overall an uptrend for the year, stillBTC chart by TradingView

Because of this confluence in market structure found in the 2019 market, we can consider it fairly likely for price to be held here.

According to BraveNewCoin’s indicator, trading volume was considerably lower for Bitcoin during 2019 than in 2018, and late 2017. This dynamic is also supported on the charts of other leading exchanges, such as Coinbase and Bitstamp. The generally falling trade volume reflects what is likely a huge consolidation within the 2017 runup range. The fact that volume is already quite low relative to the last few years’ volume, may suggest that this consolidation period is drawing toward its end.

In this vein, 2019 seems to have been an extension of 2018 – even though one year was down, and the other up – in that both years comprise the reverberating aftershock of 2017’s unbelievable price runup; and it seems that years are needed for that unprecedented rise to shake out, correct, and consolidate.

An important part of the Bitcoin story during 2019, which poses an unanswered question, is Bitcoin’s market dominance. 2019 saw the continued collapse of the wider altcoin market, as most of the year’s gains were condensed into Bitcoin and a few selected mid-cap altcoins. Major altcoins like Ethereum and Litecoin did not do well, closing lower versus Bitcoin year-on-year (although Litecoin had an enormous but brief surge toward the start of the year. BTC dominance rose from the 50s to 73% during 2019 – the last time that happened was in July of 2017.

BTC dominance is a huge open question for the yearBTC chart by TradingView

Heading into 2020, there is an open question as to what Bitcoin is going to do in the dominance department. It is rather hard to imagine the altcoin sector collapsing more than it already has, which implies that BTC dominance may have nowhere left to climb. If Bitcoin were to break above the 70s, it would enter an antiquated Bitcoin-only market paradigm – while not impossible, the market is generally maturing and it seems less probable than ever before.

Ethereum

As mentioned above, Ethereum did not do well during 2019. Still the leading altcoin by market capitalization, ETH slipped all year versus Bitcoin, almost never outperforming it and falling 50% from its opening to closing price on this trading pair. It also “capitulated” through its lowest price since mid-2017 during 2019.

ETH has underperformed Bitcoin all yearETH chart by TradingView

On the yearly chart, we see a strong confluence at roughly ₿0.0355, starting with the top of 2016’s wick. Generally, on this Bittrex chart, we can see a dramatic drop in overall trade volume during the past two years, but this reflects the diminishing stature of Bittrex itself in the crypto markets; on other exchanges – Binance for example – volume has risen in the past two years.

Lowest price level in two yearsETH chart by TradingView

On the monthly chart, we can see the point of capitulation for Ethereum/Bitcoin, at a price of ₿0.0237. This level will be an important resistance to break, if Ethereum can reverse course and head back up against Bitcoin.

A year worth of sellingETH chart by TradingView

Trading against the dollar, we see on the yearly chart that $130 is an important level, being the closing level of the 2018 market. The massive sell wick for the year exhibits just how weak Ethereum has been during 2019: although there was a 266% range of price gain during the year, all of this was essentially due to the inflationary effect of Bitcoin’s price rise.

Promising double bottomETH chart by TradingView

We can see on the monthly chart for 2019 that one of the main support zones of the chart, surrounding $100, has held the downtrend that has obtained since June. Price has gone through the 0.786 Fibonacci level, but seems stable enough to have a chance at retaking it. We also see that the monthly histogram has begun to accelerate in a contraction, although this is a very preliminary reading. The extremely depressed volume profile (Gemini) suggests the final stages of a very extended consolidation.

In fact, we can say that this consolidation took an entire two years during 2018 and 2019, to shake out Ethereum’s unbelievable price runup to an unimaginable $1,400 dollars, two years ago. The overall volatility of the crypto seems to have diminished into stability during those two years, at about one-tenth of that price. At the moment, Ethereum is well set up for a massive double-bottom separated by a year between the lows. Perhaps we will see the start of an uptrend in 2020.

Where To?

The crypto markets have been collectively downtrending since June/July, with few exceptions. Bitcoin has yet to prove support, and yet to put in a clear bottom to this downtrend.

Not much lower to goBTC chart by TradingView

But there is a very thick knot of support sitting just under it: from $7,400 to $5,800, the main area of consolidation of the 2018 Bitcoin market should prove to be an extremely tough area to break below, in the event that the downtrend must continue for a while.

It has been, and seems to still be true that, where Bitcoin goes, the market goes. Bitcoin is likely to find a bottom soon, if it hasn't already, somewhere within that support area. When that is confirmed, there is no place to go but sideways and then, probably, up. 2019 has been a smaller and less dramatic version of 2018; 2020 may thus be a smaller version of 2019, but the range of price action is shrinking, and it can only shrink so much more than it already has.

If $6,000 actually is lost again, as it was in 2018, this entire reading is invalidated. Such a scenario would border on a death-of-crypto scenario. Nothing is impossible, but this does not seem likely in 2020 or ever.

The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.

Featured Image Credit: Photo via Pixabay.com