This has been an eventful month in the Bitcoin and cryptocurrency space.
We’ve seen massive value appreciation for Bitcoin, with the BTC price almost trebling over a six-week period from November 1.
Bitcoin & Cryptocurrency Market Review For November – December 2017
December was the month the two large Chicago-based futures markets Cboe and CME both launched their Bitcoin futures products.
The run up to this launch saw strong market anticipation and optimistic market positions being taken up in Bitcoin. The consequence has been very rapid price appreciation at levels hardly seen before in the BTC market, if at all.
Bitcoin started November at $6510.
The second week of November saw a fallback from $7200 to $5700.
We then saw mostly consistent rises through the rest of November, finishing the month at around $9770.
This represents a value appreciation of some 50% for the month of November 2017.
Since then BTC has risen throughout the first two weeks of December peaking on 17 December at $19770 on the Bitfinex exchange, as well making a very brief tentative stab at just above $20,000 for a few minutes.
As of 18 December at time of writing BTC is currently trading at around $18860.
This represents a value growth of some 289% since November 1st. And a 93% value appreciation for Bitcoin since the start of December.
Altcoin Sector Performance For November – December 2017
As of 18 December, ICONOMI BLX Index is up 132% 30 day to date. But growth since the start of November has been way in excess of this.
The ICONOMI BLX price currently stands at $4.7133.
Blockchain Index (BLX) is a passively managed DAA investing in established blockchain-based tokens such as Bitcoin, Ethereum, Dash, Monero, Waves, Steem, DigixDAO, Siacoin, BAT, and others.
The current full ICONOMI BLX distribution is listed below:
Bitcoin (BTC) Value 15.00 %
Ethereum (ETH) Platform 14.17 %
Dash (DASH) Anonymity 12.89 %
Monero (XMR) Anonymity 12.68 %
Qtum (QTUM) Platform 6.90 %
Waves (WAVES) Platform 6.50 %
Lisk (LSK) Platform 6.21 %
OmiseGO (OMG) Decentralized Exchange 5.62 %
Steem (STEEM) Media 2.41 %
Augur (REP) Prediction 2.02 %
Golem (GNT) Decentralized Computing 1.75 %
Siacoin (SC) Storage 1.60 %
DigixDAO (DGD) Value Gold 1.47 %
Factom (FCT) Audit 1.33 %
MaidSafe (MAID) Storage 1.27 %
TenX (PAY) Debit Card 1.27 %
Status (SNT) Smartphone ETH Gateway 1.20 %
Basic Attention Token (BAT) Advertising 1.18 %
0x (ZRX) Decentralized Exchange 0.86 %
Bancor (BNT) Financial Derivative 0.78 %
Civic (CVC) Identity Management 0.72 %
Storj (STORJ) Storage 0.54 %
Singular(SNGLS) Media / TV 0.48 %
Aragon (ANT) Enterprise Management 0.43 %
iExec (RLC) Decentralized Computing 0.33 %
WeTrust (TRST) Lending 0.24 %
District0x (DNT Decentralized Infrastr. 0.15 %
Cryptokitties launched on the Ethereum blockchain, with widespread transaction delays and increased transaction ‘gas’ ether fees the consequence. It remains to be seen how this problem will be resolved.
If a Pokemon-style digital cat collection game can so easily bring the Ethereum blockchain network almost to its knees then it does not bode well for blockchain technology. Clearly the programmers who built the Ethereum network did not anticipate this kind of traffic nor usage levels.
Hedge Fund Performance For November – December 2017
For the calendar month of November 2017 the hedge fund was around 10% down in Bitcoin terms, and around 5% down in EURO terms.
However, since the start of December and for the first two weeks of December we have seen spectacular value recovery. Mainly this has been in USD/EURO terms.
The portfolio holding in ICONOMI has more than doubled in value for this time period.
Overall, hedge fund value is currently up some 18% on the start of December in Bitcoin terms, and 74% in EURO terms.
Cryptocurrency Outlook for December 2017
So where do we go from here?
I’m going to talk here solely about Bitcoin.
The BTC price currently seems to be taking a slight pause, not surprisingly after the massive gains of the last few weeks. But I feel this will be short-lived.
Either we will see a correction of a good few thousand USD, or else the march upwards for Bitcoin will continue – albeit I feel at a slightly lower rate for the remainder of the month.
A lot of new money and new investors/traders are piling into Bitcoin right now. Coinbase has seen massive extra demand for new accounts coming from newcomers to the cryptocurrency sector.
There is a great deal of FOMO (Fear of Missing Out) sentiment to be found in this sector, and this is driving prices. Actual Bitcoin fundamentals have little to do with it.
Although some businesses are now accepting Bitcoin as a payment method for the first time, and at least one big high-profile business – Amazon, are said to be considering introducing Bitcoin as a means of payment, actual transaction usage of the currency has not increased substantially over the last few months.
Delays still occur in Bitcoin transaction processing. High transaction fees are another sore point. These issues are still unresolved.
Bitcoin still relies on relatively primitive blockchain transaction/mining technology. The minting, distribution and transaction processing system, as well as the blockchain node system is ill-suited to coping with the demands placed on it by increased take-up.
The mining system used by Bitcoin (proof of work or POW) is inefficient and extremely wasteful of resources, not least electricity as recent reports in the media have highlighted. Green and ecological Bitcoin is not.
But interest in Bitcoin among the public continues to grow. The strong price rises of the last month, together with the launch of the two Chicago-based futures exchange Bitcoin products has drawn increased media attention toward Bitcoin.
It’s all a bit like the early days of Linux, the open source Unix-based operating system.
At first, Linux was ignored and dismissed as something just for a small group of geeks and hackers.
But as take-up increased it gradually drew more attention to itself. More people, more businesses and organizations became interested, to the point at where we are now, where Linux can be found even in the IT centers of large banking and multinational corporations, as well as government departments. Linux has become mainstream.
We are seeing a similar pattern of events with Bitcoin. We’re not yet at the stage of mass take up and acceptance of Bitcoin. That will take a good few years or more yet. But we are definitely now past the ‘end of the beginning’.
Is Bitcoin a Bubble?
Whenever the mainstream media or the old-school traditional financial sector focuses on Bitcoin it invariably involves telling everyone that ‘Bitcoin is a bubble’ and that it’s dangerous, unsafe, about to collapse, etc.
I’ve heard this ‘Bitcoin is a bubble’ kind of talk many many times. I’ve been involved with trading Bitcoin almost since it started and the ‘Bitcoin is a bubble’ comment is one that never goes away.
In particular it tends to pop up whenever Bitcoin is coming up to another of the ‘psychologically important’ price points. Such as $10, $100, $1000, $10,000, $20,000…and $50,000, $100,000 and beyond.
I can remember when Bitcoin was just $14. When I traded Bitcoin for $40, $50, and $190. I never thought it would reach $1000, let alone nearly $20,000. At least not in such a short space of time. I am kicking myself now that I did not buy more Bitcoin when the price was under $100.
In the future, a $20,000 Bitcoin will look like an incredible bargain.
Bitcoin has a long long way to go. It is like the start of Google, Facebook or Twitter. I agree BTC is not innovative like some altcoins, and there is a lot more innovation to come. How much of this will come from BTC is questionable. At the moment it seems like not much.
But there is no ‘bubble’ either. Bitcoin’s total market capitalization is still only equivalent to the stock market value of the Wallmart chain. In international investment market proportions that’s small fry.
Bitcoin and crypto is a new concept and plenty of people are interested. This is what will drive prices, not fundamentals. Bitcoin is not going away. It’s here to stay, and it will be big, many times bigger than it is now. That means there is no bubble.
There are always market fluctuations and as we have seen with Bitcoin and other cryptocurrencies these can be substantial. Price volatility is high. We can and have experienced falls of a good few thousand dollars. But that does not represent a bubble.
Will we next see a fall back in the short-term from the current dazzlingly high price levels for Bitcoin? This would not be a surprise.
Professional traders who deal in futures can benefit from both falling as well as rising prices. This could make the Bitcoin market more volatile than it already is.
On the Chicago futures exchanges, Bitcoin futures contracts are currently trading at $20,000 and above. This is an encouraging sign.
But market opinion is that it is difficult to realistically price Bitcoin in terms of fundamentals. Much of the price is driven simply by FOMO sentiment.
There is no shortage of market predictions and opinions. But basically no one knows for sure how things will develop in the cryptocurrency space.
But if past performance of Bitcoin is anything to go by, then my view is that the Bitcoin price will very shortly – probably this month, reach and exceed $20,000, and be on its way to $22,000 and $25,000 in January 2018.
Will We See The One Million Dollar Bitcoin?
At least one person certainly thinks so.
John McAfee (he of the anti-virus software) tweeted the other week that he regards his previous forecast of a $500,000 Bitcoin within 2 years as unduly pessimistic.
He expected Bitcoin to reach $10,000 by the end of 2017.
As the Bitcoin price has now already almost hit $20,000 and its only mid-December 2017 McAfee has revised his 2 year forecast.
To $1 million.
That would do nicely.
Let’s hope he’s right.