September 2017 has been a turbulent month for cryptocurrencies.
Bitcoin started the month at around $4600.
The question was whether the substantial growth achieved during August would be maintained through September.
As it turned out, the August bull run turned out to be at an end. A lower support level for the first two weeks of September was found at around $4100.
Then came a short dip down to below $3100, before rising and then settling at a new support level around $3500 by the third week of September.
For the last week of September BTC then climbed back steadily to reach $4350 by the end of the month.
This represents an overall fall in value for Bitcoin of -4.6% in September.
Into the first week of October, Bitcoin rose to around $4500 before falling to a low of $4150. Since then we’ve seen a rise of some 15% to the current level of around $4800 as of 10 October.
For the last six months to date, Bitcoin is up +295% in value, despite the September dip (see image left).
The market had to digest a number of sudden disruptive changes to the cryptocurrency environment.
Chinese regulatory authorities ordered closures of Bitcoin exchanges as well as new Initial Coin Offerings (ICOs), both of which are now prohibited from operating in China.
The South Korean government also introduced regulations affecting ICOs based in South Korea.
This has had an immediate effect on market sentiment pushing prices down across the board, both Bitcoin and other cryptocurrencies.
Negative remarks and comments regarding Bitcoin made by leading financial figures, for example Goldman Sach’s Jamie Dimon also had an adverse effect on Bitcoin and crypto market sentiment.
The Altcoin Market in September 2017
Altcoins saw substantial falls during September. The ICONOMI index of altcoins which includes some 25 different altcoins rose first from $1.10 per ICONOMI unit to a high of $1.90. This was short-lived, being followed by a sharp decline to $1.30, and at one point briefly falling to a low of around $1.10.
ICONOMI then recoverd somewhat to around $1.50 by the end of September 2017.
Market Outlook For Altcoins in Ocober 2017
The Altcoin market looks like remaining depressed throughout October as a result of the upcoming Bitcoin hard fork for Bitcoin Gold.
In other words, a replay to the situation we had with the last hard fork for Bitcoin Cash.
So it looks like falling prices will be seen across the board in the altcoin sector during October.
Bitcoin Outlook for October 2017
Where does Bitcoin go from here?
The assumption is that the Chinese financial regulatory authorities will introduce a system of licensing for Bitcoin exchanges and possibly also for future ICOs. For the moment however, this is all in the future. So far nothing definite has been announced.
There have been positive announcements from some sections of the financial establishment regarding Bitcoin and cryptocurrencies in general. This will have positive effects on market sentiment. There is speculation that Goldmann Sachs are examining the potential for setting up a Bitcoin and cryptocurrency trading desk.
Concern about risks to the value of the Euro in view of the political turbulence in Spain (Catalonian crisis), plus the events in North Korea, which can impact on surrounding countries in the region and their economies and financial systems – notably South Korea and Japan, may have a positive effect on the Bitcoin and cryptocurrency markets.
Bitcoin is due to hard fork yet again, this time on October 25th when ‘Bitcoin Gold’ (BTG) will be created.
This is currently depressing the altcoin market with prices generally falling once again in a similar replay to the situation we experienced with the last fork for Bitcoin Cash.
Existing BTC private keys which hold a Bitcoin balance will be credited with an equivalent 1:1 amount of Bitcoin Gold on 1st November.
The BTG project say the aim of Bitcoin Gold is to compete with Ethererum and other coins and benefit mining decentralization. BTG will a different mining algorithm to Bitcoin called Equihash which runs using GPU rather than ASIC chips.
There are also a number of other technical differences between BTG and BTC. However, the BTG project is still in the early stages with mining software, pools and even a wallet and block explorer not yet ready. As I understand, only two exchanges so far are planning to listing BTC – Bitstar and Bitexchange.
Hedge Fund Trading Results For August-September 2017
Measured in Bitcoin value, the fund grew in September by +3.4%. This is despite a fall in BTC price for September of some -4.6%.
On 1st Sept 1 BTC stood at EUR 3900. By the end of the month, the price had fallen to EUR 3654. Combined with the altcoin sector falls, this meant the overall value of the fund fell during September by around -10% before revenue deductions. This makes September 2017 the worst month to date by trading results.
At the end of the month, the fund was d versified into some 43 different digital currencies. I’ve since reduced this to around 25, with the aim of reducing it further to a maximum of around 20.
I’m striving to restructure the fund to increase the proportion of trading capital held in USDT and BTC as opposed to altcoins.
This is important in order to hedge more effectively against adverse or sudden otherwise unanticipated market movements. This is crucial for capital protection and loss minimization. It does lower risk, but at the cost of some foregone profit opportunities.