2018 was certainly the single ugliest year for Bitcoin. The range traded was substantial. The drops were substantial. In fact, by any measure it was the ugliest year for cryptocurrencies ever – price wise. Let’s take a look at some of these massive and crazy numbers we saw in 2018.

 

First, let’s do a quick overview of today’s trade

 

Bitcoin’s showing some strong momentum so far – the light green shaded area represents the current down-channel coming off of a prior big up move, this creates what is known as a bull flag, which is a strong bullish continuation pattern. We see a text book version of what a breakout of a bull flag should look like: Break above the channel with a retest back down to the channel as support. What I really want to see as the next move is a move above the December 2018 open at 3944.69. Now onto the 2018 market.

 

2018 by the numbers

 

Let’s breakdown some facts here of what happened during 2018 for Bitcoin and the cryptocurrency market as a whole. It was not a friendly one to traders and investors.

  • From the 2018 high of 17234.99 to the 2018 low of 3122.28, we see a massive -81.88% drop.
  • From whenBitcoin opened 2018 at 13880 and closed down at 3693.3 – that’s a -73.39% slaughter.
  • To make matters even worse, Bitcoin spent the past five consecutive months with closes below their monthly open (August 2018 – December 2018). That’s ugly.
  • There was only one month between August of 2018 and December of 2018 where there was even a monthly high that broke a prior month’s high, and that was in October of 2018.
  • Out of the entire 2018 calendar year, there were only 3 months that saw a close above their open – if we remove the February 2018 candle from the equation (it closed and open around the same value area, opened at 10268 and closed at 10315), then we only had two months with closes greater than the open.
  • And counting the 22-weeks from August 2018 to the end of December 2018, there were only 8-weeks that had closes above their open, the only real bullish close being the week of December 17th 2018 which saw prices shoot up from 3280 to 4300

 

What about 2019?

How will January 2019 and the remainder of 2019 go? It’s to early to tell. So far traders have kept Bitcoin above it’s 2019 open of 3832.60 and the volume for January 2nd so far is greater than past 5 trading days highest volume. For fundamental traders and investors, there are some major catalysts to look for in 2019. First, the VanEck/SolidX BTC ETF will face its approval/disapproval in late February of 2019 (February 27th) – that’s the final delay for the SEC, they can’t push the date back any farther. The second important event will be the launch of the NASDAQ – Bakkt Bitcoin futures contract, this is pending approval of the CFTC (Commodity Futures Trading Commission). This Baakt futures contract is important because it will be a physical delivery futures contract – meaning that any futures contract held into the next quarter will be settled with the ownership of actual Bitcoin – not just a derivative.

 

2019 and into 2020 using Gann

Utilizing Gann’s methods – and without going into nitty gritty details – these are some of the following behaviors we should expect to see happen with cryptocurrencies in the future.

December 2018 – mid-February 2019 – Continued and muted trading, definite rise off of extreme lows, but no wild pressure higher. Significant analysis of cryptomarkets that began with institutional investors will near completion and will yield a kind of ‘mob’ effect of investment professionals conclusions that cryptocurrencies are, in fact, an important, new and valid asset class with both a use and value basis. Price spike higher between February and Mid-March 2019.

Mid-February 2019 – May 2019 – SEC will issue support for cryptocurrencies and a Bitcoin ETF – but with clear caveats and rules. Cryptocurrency enthusiasts who are attached to cryptos due to the political and idealistic reason for cryptocurrencies existence will not be happy with these limitations and constraints. In the meantime, the analysis and research completed by large investment entities and well-capitalized individuals will scramble to ‘be the first’ to create an ETP that will comply with the SEC’s new blessing. Or, the CFTC will take on the issue of cryptocurrencies. Equity markets begin recovery in early 2019 to reach new all-time highs. April 2019 – July 13th 2019 should yield the highest consecutive months of growth for cryptos in 2019.

May 2019 – October 2019 – Expect similar price action to the time periods after the Mt. Gox 2013 highs and the 2017 highs – slow but persistent increases in value across the entire cryptocurrency market. There will be another ‘civil war’ in cryptocurrencies – with political ideologies competing against speculators and investors. The biggest wealth generators and ‘upper classes’ of emerging markets will become worried and flee to the West. Profit taking in cryptocurrency markets during the Summer of 2019.

October 2019 – February 2020 – Equity markets (stock markets) should have been experiencing a massive rally throughout all of 2019, but a major disconnect is occurring between equity markets and growth outside of North America, Australia, and the EU. Traditional currencies will collapse, beginning with emerging markets – especially in South America. In Africa, the South African rand will be near complete collapse and may have totally collapsed. The Israeli shekel becomes increasingly important. China’s currency may also collapse, resulting in a legitimate panic phase in global markets in 2020. Here, cryptocurrencies become the worlds guardian angel for the common man – the way to buy and sell without worrying about any individual nations currency – portents of this began in Venezuela in 2017 and 2018. Cryptocurrencies will be solidified as an asset and security – possibly having as much security as gold.

February 2020 – August 2020 – Currency collapses around the globe will solidify cryptos as the defacto way to purchase goods and services for nearly the entire planet – the US Dollar, Japanese Yen, British Pound, and Euro will remain as world governments and corporations will be slow to move from traditional sovereign fiat currencies. The Japanese may convert to a national cryptocurrency. The Israeli Shekel will increase in significance. Equity markets in a panic phase.