2018 was a rough year for Bitcoin.
According to CoinMarketCap, the price of Bitcoin was USD13,901 on January 1, but it gradually decreased for the rest of the month. Around the same time, a hacking incident occurred at a Japanese virtual currency exchange, Coinceck and by February the price of Bitcoin had plummeted to USD6,287.
The price was up and down during spring and early summer, but the ceiling became lower lower and by the mid-year it became difficult for Bitcoin to push past USD10,000.
During autumn, the upper price for Bitcoin was still relatively low, oscillating between USD6,000 and USD7,000 with no real action.
At the end of September, there was a hacking incident at Zaif, another Japanese virtual currency exchange. This had minimal impact on the price of Bitcoin, which hovered around USD6,000 for some time after.
The hash wars
The Bitcoin price was around USD6,300 on November 14. Then the Bitcoin Cash hash wars began with the hard fork that would shake the market, with Bitcoin dropping back ti USD6,000.
The anxiety caused by the hard fork was contagious and seemed to spread to other currencies, including Bitcoin.
Once the price of Bitcoin had fallen below USD6,000, it would not stop dropping, down to USD5,000, then USD4,000 and finally reaching USD3,000. A relief bounce to USD4,000 came and we're now sat at about USD3,855.
The year that was
The price action on Bitcoin was a wild ride in 2018, but traders have become accustomed to the volatility.
Although the price of Bitcoin is dramatically less than at the start of 2018, when you zoom out a little, it puts things in perspective. In January 2017 the price of Bitcoin was around USD8-900. We're more than 3x up from there.
We can interpret the price movement this year as Bitcoin returning to a more rational, appropriate level. There is no widely accepted valuation model for Bitcoin at the moment, but Bitcoin’s price surge in 2017 seemed to be too extreme.
Going forward, a valuation model for Bitcoin could temper excessive price movements and may be useful for the development of the cryptocurrency industry.
Feel free to email cryptoresearch@quoine.com for any questions, comments or suggestions about this report.
