Cryptocurrency Market Analysis for November and December

Tech Analysis
  • Bitcoin Cash hard fork has major impact on the crypto markets in November
  • BTC lost a worrying 35 per cent across the month; at month start it was trading at $6,368 and by 28 November it was trading at $4,113 on the three-hour charts.
  • LTC lost 36 per cent in value in November. It began the month at $49.96 and on 28 November it was trading at $32.65 on three-hour charts.
  • ETH lost 41 per cent throughout the month. On 1 November it was trading at $198.7; on 28 November it was trading at $115.7 on three-hour charts.

Summary

November 2018 was punctuated with huge loses for cryptocurrencies across the board. The month followed the bearish trend set in October. It is the greatest loss since April 2013, when Bitcoin’s prices nose-dived from $165 to $91, representing a 44 per cent drop in value. The losses go against leading crypto analysts’ predictions that the market was headed into a bullish zone at 2018 year-end.
The losses were caused by news of the Bitcoin Cash hard fork on 14 November. A hard fork is a permanent divergence from the previous version of the blockchain – one path follows the new upgraded version and the other continues along the old path.
Widespread crypto liquidity commenced in the days preceding the hard fork, perhaps over fear of its outcome. The fork pitted two rival groups against one another: BCH ABC wanting the block size of BCH increased, and BCH Satoshi’s Vision for the status quo to be maintained. This had the ripple effect of lowered prices for other cryptocurrencies as investors looked to dispose of their crypto holdings.

BTCUSD
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The leading cryptocurrency by market capitalisation started the month trading at $6,368.4. This was a slight dip from September’s psychological price of $6,500. The 21-day moving average was below the seven-day moving average at November start and stayed there for most of the month: an indication of the strong bearish wave that had engulfed the largest cryptocurrency. The Relative Strength Index (RSI) was oscillating within the safe zone: between 30 and 70 until 14 November, when it dipped downwards into the oversold area (Point BB). This was attributed to the Bitcoin Cash hard fork, which led to the closure of BCH trading.
The increased selling activity was a protectionist move by investors to dispose of holdings in cryptocurrency to avoid losses during this tumultuous time. The initial support level set at $6,300 was breached as prices surged further downwards. This was caused by the Bitcoin Cash hard fork on 14 November.
As the month wore on, a contracting triangular pattern signalled strong bearish momentum (Point BA). Prices pushed below the $4,000 mark, showing the effect the hard fork had on cryptocurrency markets. By 28 November, the 21-day moving average crossed over the seven-day exponential market average (EMA) (Point BC), signalling an attempt at market correction that might see a bull run to push prices upwards.

LTCUSD

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Litecoin began November trading at $49.96 and was hit by the same woes that befell other cryptocurrencies. As the month wore on, it surged southwards, breaking past October’s support level set at 45 per cent. It lost 36 per cent in value on major exchanges, including Bithumb which transacts more than 50 per cent of LTC’s exchanges. On 14 November, the RSI dropped below 30 into the oversold area (Point A). As with other cryptocurrencies, news of the BCH hard fork had the effect of LTC pushing prices downwards as well.
The month began with the 21-day EMA above the seven-day EMA: an attempt at market correction following the drop in value from October’s psychological price of $50. However, a strong contracting triangular movement engulfed the charts after 14 November (Point C), due to the Bitcoin Cash hard fork ripple effect on altcoins.
By month end on 28 November, the 21-day EMA crossed over the seven-day EMA (Point B), signalling a bullish trend is in the offing.

ETHUSD
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Like Bitcoin and Litecoin, Ethereum took a severe dip, losing 41 per cent over the course of November. ETH started the month off trading at $198.70 on the three-hour charts, but it took a sharp dip as the month pushed on. On 14 November, as with other altcoins, investors were looking to dispose of coins held to avoid losses. This had the effect of pushing the RSI into the ‘oversold’ area (Point A). Subsequently, a bearish trend developed, forming a contracting triangular pattern (Point B).
The $100 level was constantly tested although it was not breached. Prices hit a high of $177.18 mid-November and $110.83 on the lower side. By month-end on 28 November, ETH was trading at $115.72, signalling a bullish momentum is in the offing for December start. Furthermore, the 21-day EMA crossed over the seven-day EMA on the three-hour charts (Point C), showing that a bullish momentum might help in market correction.
The exchanges that were more active (in volumes) with ETH across various pairs this month were OKEx (5.18 per cent), BitFinex (5.04 per cent), and CoinBit (4.03 per cent). In the news, it has been reported that there are plans to upgrade ETH’s network protocol to improve its efficiency.

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