Cryptocurrency Market Analysis for Dec 2018-January 2019

Tech Analysis
  • Overall, Bitcoin lost a negligible four per cent in value. It began the month trading at $4,038 against the dollar and closed the year at $3,852. There was improved investor confidence despite the negligible price slump as the momentum looked upwards as we enter 2019.
  • Litecoin gained one per cent, starting off the month trading at $31.5 compared with $31.8 at year end (27 December). However, Litecoin suffered negative investor sentiments with its relative strength index (RSI) going into the ‘oversold’ area at least twice throughout the month.
  • Ethereum also saw slumped market activity, going into the ‘oversold’ area during December. By overall per cent change, Ethereum gained, moving from $114 to $128 (27 December) representing an 11 per cent gain.

Summary

After the heavy losses experienced across the cryptocurrency markets in November, there were spirited attempts by the various Altcoins at market correction at year-end. The month of December has been punctuated by a strong bull run across most pairs with prices headed for an upward rally as we usher in 2019.

As we enter 2019, new price ranges are likely to be set by the bullish momentum in the markets. This has had a positive effect on investor sentiments as will be seen in the market activity across the pairs analysed. The latter pairs are a marginal representation of the whole market.

Bitcoin (BTC/USD)

The pair lost, albeit negligibly, four per cent points throughout the month. This followed the drastic nosedive in the value of BTC in November. During that crash, prices dropped from the $6,000 mark to $3,000 - a drop in magnitude that was last witnessed in April 2013. This effect, blamed on the post-fork schism of Bitcoin Cash, resulted in slumped investor confidence in November, which in turn informed December’s upward rally as the BTC/USD pair made attempts at market correction.

Bitcoin’s performance across various exchanges has been promising, despite the drop in value seen across the month as a whole. The primary evidence of this is perhaps seen in the RSI (A) which moved into the ‘undersold’ area. This signals the strong sentiments held by investors regarding BTC.

Support held at the $3,200 mark (SUPPORT) and there were minimal tests on this support level dropping further (see the $3,100 mark labelled as point L). On the upper side, resistance held at the $4,300 mark (RESISTANCE) with several attempts to test it with prices pushing upwards of $4,300 late in the month. This illustrates the strong bullish momentum that has engulfed the BTC/USD markets towards the close of 2018.

Lastly, both the 7-day and the 21-day moving averages (MA) are headed upwards (C and B respectively), with the 7-day exponential moving average (EMA) above the latter. This indicates that the bull run is expected to ease off as we head into 2019.

Litecoin (LTC/USD)

Litecoin started off December trading at $31.5 and stood at $31.8 on 27 December, representing a slight overall gain of one per cent gain in value during the month. This value change at year-end stands in significant contrast to the LTC/USD trading figures seen across 2018 (compare to peak trading at $275 in early 2018). During the final quarter of 2018, the LTC/USD pair averaged a value of $45, which was also its support level for the period. On the other hand, resistance maintained at $50 for that same period.

During December, however, the price has been oscillating around the $30 mark: moving between $22 support and $37 resistance (see chart).

Point A shows the RSI at the ‘normal’ region for December close, indicating that investor confidence in Litecoin is intact and that no cause for sale has been occasioned. Had this occurred, it would have moved the RSI into the ‘oversold’ area once again as already seen two times during the month. Furthermore, the normal RSI suggests that markets have not been so favourable as to warrant increased efforts at retaining or holding onto LTC holdings by investors; something which would have otherwise moved the RSI into the ‘undersold’ area towards year-end.

Points B and C illustrate the 7-day EMA as it crossed over the 21-day EMA late in the month, signalling that the bull run will likely continue into the New Year.

Ethereum (ETH/USD)

Across the various exchanges, ETH recorded the highest per cent gain during December: increasing 11 per cent by year end ($114 at December start standing against $128 at year end). This gain consequently attracted improved investor confidence as well as price consolidation at the higher end towards the close of the month (as seen in the analysis chart above).

On the lower side, support was placed at $82 (L), which was also the lowest mark the ETH/USD pair touched upon during December. On the upper side, ETH/USD subsequently rose to peak at $160 (H) in late December. Additionally, the upward rally saw the RSI move into the ‘undersold’ area as investors looked to hold onto their ETH investments (A).

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