Crypto Market Forecast: The week ahead, 14th January

Following an encouraging start to 2019, prices in digital asset markets have undergone an almost full reversal in the last 7 days. Crypto benchmark BTC fell ~13%, while recent market standout ETH, lost its 2nd position in Brave New Coin’s market cap table falling sharply by ~27%. The total market cap for crypto fell ~14% with very few winners in the market over the last week.

Sentiment surrounding security and market manipulation of crypto markets took a hit last week, as the Ethereum Classic network suffered a 51% double-spend attack and potentially over $1 million was sent to a hacker who managed to rewrite the ETC chain and receive double payments on exchange transactions.

Given that Ethereum Classic is the most recognizable blockchain to have ever been successfully 51% attacked, negative implications regarding the ease of other PoW chains have been felt.

The attack occurred a few days after ETC shorts opened on Okex, with the hacker subsequently returning taken funds back to the gate.io exchange. The suggested narrative that the attack was executed simply to create some short term market anxiety in order to successfully bet against the price of ETC is compelling. The price of ETC has fallen ~24% in the last week.

A reason for volatility returning to crypto asset markets may be the reactivation of a number of long dormant, rich BTC addresses. These reactivated accounts appear ready to buy/sell crypto with their newly active funds and may potentially accentuate any price swings over the next few weeks. For savvy traders, however, volatility always brings profit opportunities.

The trading week also closed with a few exciting stories for long-term crypto holders as crypto fund builder Bitwise announced a Bitcoin ETF application lodged with the SEC. While multi-functional security token exchange, Tzero, began distribution of the platform’s native tokens. The security token platform is an early contender for most exciting crypto infrastructure project of 2019.

Upcoming events in crypto

January 14th-18th –Ethereum (ETH) Constantinople hard fork

The Ethereum blockchain’s Constantinople mainnet hard fork is scheduled to occur on block #7080000. Upgrades include a more efficient approach to processing information in the Ethereum Virtual Machine (EVM) from protocol EIP 145, new off-chain scaling capabilities from protocol EIP 1014 and a reduction in the block reward from 3 ETH to 2 ETH from protocol EIP 1234. This is expected to create some positive speculative momentum for ETH with the implication that a network is ‘improved’ following a planned hard fork.

January 16th – Cboe XBT, Bitcoin futures Expiration Date

The current round of CBOE Bitcoin Futures trading has its last trading day on Wednesday. This will be the last chance for relevant futures contracts to be traded or closed out, and post this date outstanding contracts need to settled by cash as per original specifications. There were over 5000 XBT contracts traded, each worth 5 BTC. The days surrounding futures expiration are always prone to unusual price activity with scenarios like short squeezing, tending to exaggerate price movements.

January 17th-18th – NiTron Summit (TRX)

Tron (TRX) a top 10 blockchain asset/network by market cap, hosts its first annual conference this week in San Francisco. As a network often characterized by a vocal community and strong PR channels, the conference may be watershed event for the project with upgrades, partnerships and products likely to be announced. The event is headlined by basketball icon Kobe Bryant.

Top 10 Crypto Summary

It was a week of double-digit red trading, with sharp periods of selling pressure on Thursday and Sunday driving the dips. Recent price improvements have been corrected and any feelings that the crypto bear market is ending soon have been put paid to.

Outside of the top-10, as highlighted by cryptocurrencynewsfeed small cap asset ODEM was able to buck the market and minimize losses – with its price falling just ~1% – on the back of news about a partnership with manufacturing giant GE.

Bitcoin has again found its stumbling block at the $4000 price level, with support once again breaking at the threshold. Sentiment from crypto Twitter appears to suggest that trading driven by technical analysis signals may have been the biggest factor for this week’s price falls.

The Bitcoin network hash rate has been trending downwards over the last week, likely driven by falling prices reducing mining profitability. The number of sending BTC addresses also took a sharp dip over the last 7 days.