Tuur Demeester, a professional trader and expert in crypto, has posted the analytical review of the current situation on bitcoin market in his blog. The expert inclines to the view that bitcoin price is highly unlikely to hit another historic maximum in 2018.
According to Demeester, $5 700 threshold was not the “bottom” at all, whatever many other analysts think of it. He believes that quite a few indexes and market forces indicate that bitcoin price will plunge below this amount before the end of this year.
Though having no doubt in bitcoin’s success in the long run, Demeester is quite skeptical about bullish short-term forecasts, given the current state of the bitcoin industry.
In particular, Demeester believes that 7 months that passed since the start of the bitcoin price downfall are not enough for “cooling down” the market after the preceding three year-long rally (2015-2017). The expert suggests to consider a number of factors that demonstrate the market’s unpreparedness for growth:
• Mining. Bitcoin network hashrate has tripled since January 2018. This means that a huge amount of new and more efficient mining rigs have stepped in. Given the declining bitcoin price, this may affect adversely those miners who were not able to upgrade their mining machinery or find more advantageous mining environment (like jurisdictions with cheaper electricity). Their profits should have been down by 90% in last 7 months. Being subject to such a heavy financial pressure, miners are left with no options except giving up holding bitcoins and selling huge BTC amounts instead, which, in turn, hampers the bitcoin price growth.
• Trading volumes have decreased significantly since last winter and spring.
• Retail interest. Numerous polls and analytical data sources indicate that fewer and fewer investors consider buying bitcoins in the near future. Bitcoin holders too are less willing to pay in BTC, whereas only a shrinking minority continues to be interested in cryptocurrencies.
• First US-based Bitcoin ETF is unlikely to be approved before 2019. Should this not happen this September, there will be much disappointment in the crypto community.
• Lack of handy and easy-to-use custody tools for institutional investors. Despite the general attractiveness of the bitcoin market for investors, most of them are likely to play short, as in the case with bitcoin futures.
• Network Value to Metcalfe Ratio (NVM), which indicates the correlation between a network value/usefulness and the number of its active users, shows that bitcoin is now substantially overestimated.
Tuur Demeester admits, however, that there are some indicators that show the long-term prospect of the bitcoin price growth. 8% drop of Chinese Yuan against the USD, that may lead to Chinese capital fleeing into Bitcoin, the graudual growth of Bitcoin dominance against the background of weakening trend among marginally useful altcoins are among these.