Bitcoin Monthly Forecast – January 2018

After the large move higher during the month of November and the momentum in the prices over the last couple of months, the bitcoin bulls cannot be faulted if they had expected more of the same during the month of December. The interest in the bitcoin market continued to grow and we saw more and more players walk into the market making it bigger and attractive as well. This only added to the demand in the bitcoin market and with the supply being limited, it is only natural to expect the prices to move higher.

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Bitcoin Market Faces a Challenge

But what the bulls did not expect was the whole new dimension being brought into the market by the introduction of bitcoin futures. The first half of December saw the introduction of bitcoin futures in both the CME and the CBOE and for the first time in the history of the bitcoin market, the traders and the investors had an opportunity to hedge the cryptocurrency. This is something that was new to the crypto market and with this introduction, it brought in much more of a balance between the bulls and the bears. By this time, the bitcoin prices had become a raging bull and for a brief while, it did go as high as the $20,000 region but thats the highest that it got during the month.

The futures trading led to a bigger and more equal fight between the bears and the bulls and this helped to control the demand and the prices as well. Also,with more and more traders coming into the bitcoin market, the regulators also began to feel the need to step in and do something to regulate the frenzy and the prices as well. That is why we saw more action against the bitcoin industry from various regulators and the actions ranged from total bans to shutdown of exchanges, levying of taxes on gains made etc. One of the biggest bitcoin markets, South Korea, also saw the regulators step in and express their concern over the frenzy they began to look at measures to control the markets which included more auditing, stricter KYC, taxes and also considering shutting down exchanges as well. All these events and news were enough to scare away the investors and traders as well as the speculators and they began to turn their attention to altcoins like ethereum, litecoin and ripple and this led the BTC prices lower and it closed the month below the $15,000 region.

Bitcoin Prices Expected to be Choppy

Looking ahead to January, we expect some of the underlying bullishness to show through but it has to be said that the situation is still fluid as far as regulation is concerned. There are various measures being planned in different parts of the world and nothing is certain until and unless the regulators come out and spell out their plans. The bitcoin market should be happy that they have made the central banks sit up and take notice and this extra attention on the BTC market is good for the long term. Regulation is also likely to bring in the bigger investors and banks into the market which will help it to mature in the medium and long term and drive away the speculators and the volatility as well.

But so far, there has not been any concerted action from the regulators and this raises a lot of uncertainty and risk in the BTC industry. This is the reason for the weakness in the BTC prices and for the investors and speculators looking at altcoins so that they could make some quick profits on them before they also come under the focus of the regulators. It is an ever changing market and technically, we believe that the $15,000 region should present a bit of a resistance to the BTC bulls and once that is cleared, the bulls would be looking at $16,500 which should present a bigger challenge in the short term. As explained earlier, the situation is ever changing and that is why it is important that the traders keep their fingers on the trading button in such a volatile market as anything could happen in any part of the BTC market which could affect the prices a great deal and bring in volatility either way.