Bitcoin price weekly analysis: is it time to buy the dip?

Rhys Muter 13 January 2018 NEWS

Bitcoin weekly - ITI

Bitcoin has lost 18.45% this week, showing a shaky market oversensitive to government regulation.

Price movements

Bitcoin started out the week at a promising US$17,468.90 on 6 January 2018 after a week where the regulatory environment soured a little, causing the price of bitcoin to retreat significantly to close out the week at US$14,237.70 as at 13 January 2018.

On 12 January there were reports initially claiming that the South Korean government would be banning cryptocurrency exchanges outright. The South Korean government has since clarified its position, stating that a blanket ban is not its intention but that additional regulation for exchanges will be forthcoming.

Market capitalisation

The week for bitcoin’s market capitalisation has been equally as challenging, beginning the week as high as US$293.2 billion but ending at US$239.1 billion, representing nearly a one-fifth loss of market cap, with capitalisation down 18.45%.

That's a big slip for the market-leading cryptocurrency. Interestingly, bitcoin’s total market dominance only dipped by 4.53% as a measure of its wealth against all other cryptocurrencies in the market.

This is a significant figure because in only one month the market dominance of bitcoin has fallen 25% from 58.58% to an all-time low of 32.6%. This suggests that the huge ground bitcoin is losing has slowed over this week a little. Whether that is enough to forecast a resurgence in market dominance of bitcoin is uncertain.

24-hour trading volume

Along with losing market dominance, bitcoin has also lost a lot of ground in 24-hour trading volume. At the outset of the week bitcoin had a robust trading volume of US$23.5 billion. After a brief week high in 24-hour trade volume of US$24.5 billion that value plummeted, halving by the end of the week to be hovering at about US$12.54 billion across most major markets.

Looking forward

The regulatory environment for bitcoin trading is seeing a trend towards greater government regulation. This week the United States Senate moved to criminalise non-disclosure of bitcoin assets, a move that comes alongside applying stricter regulations on US cryptocurrency exchanges to conform with "know your customer" and anti-money laundering policies.

These regulatory changes will continue to affect the price of bitcoin negatively. The difficult factor to gauge will be market entrant numbers. That is to say how many potential investors will be scared away by increasingly strict government policies. This is important because most people entering the market usually start by purchasing bitcoin.

Current data shows 920,000 active bitcoin wallet addresses. That figure is up 25% from one month ago and is a 79.33% increase from this time a year ago. Those figures suggest a growing number of market entrants. If this number continues to increase going forward, downwards pressure on bitcoin’s price will settle once a regulatory framework has been established.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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